divorce=bankruptcy!

[rookie]

My wifes uncle and aunt have or are in the process of filing for a Chapter 7 bankruptcy, their both getting divorced.

Neither one of them can afford to pay the mortgage, or the 2nd mortgage on the house. They've decided to let the home go into foreclosure.

Since there are 2 mortgages on the house, we know that the 1st mortgage will get more than likely all of their money owed, but what about the 2nd mortgage?

Are secured debts like that dischargeable under Chapter 7?

[keepmine]

Yes, they can be discharged in bk.

[lrprn]

Since there are 2 mortgages on the house, we know that the 1st mortgage will get more than likely all of their money owed, but what about the 2nd mortgage?

The timing here is crucial. Your aunt and uncle need to give up the house as a part of their bankruptcy and not sign any reaffirmation agreements with the lenders. That way they will owe nothing to either lender no matter what the lenders get when they auction the house. If they surrender the house *before* they file, then they *will* owe whatever is left over after the lenders auction their home. Obviously they need to surrender the house when they file their bankruptcy to be able to walk away owing nothing.

Are secured debts like that dischargeable under Chapter 7?

Yes when the assets are surrendered as a part of the bankruptcy and if they do not sign a reaffirmation agreement with the lender.

[demismom]

Huh?

If they surrender the house *before* they file, then they *will* owe whatever is left over after the lenders auction their home. Obviously they need to surrender the house when they file their bankruptcy to be able to walk away owing nothing.

This has ME confused. When we went in February for our Attorney consult our attorney told us to go home, call the mortgage company and abandon the property to them. We had retained him, but because they're slower than molasses growing the dead of winter, our attorney didn't get our petition filed for 5 freakin' MONTHS!

Is that still considered surrendered in the bankruptcy???

[lrprn]

Is that still considered surrendered in the bankruptcy???

My apologies - I answered hastily and typed *before* when I meant *after* - duh!

If you surrender your home first and then file bankruptcy, you absolutely can discharge what you owe on the mortgages after the foreclosure sale. However, if you surrender your home *after* filing, then you will owe whatever is left over after the home is sold at auction.

[Blue_Ray]

ok

[DivorceRuinedMe]

My apologies - I answered hastily and typed *before* when I meant *after* - duh!

If you surrender your home first and then file bankruptcy, you absolutely can discharge what you owe on the mortgages after the foreclosure sale. However, if you surrender your home *after* filing, then you will owe whatever is left over after the home is sold at auction.

OMG - I almost had a heart attack when I read what your wrote incorrectly! I think I just lost 5 lbs of sweat.

[lrprn]

OMG - I almost had a heart attack when I read what your wrote incorrectly! I think I just lost 5 lbs of sweat.

I'm so sorry about that, DRM A thousand lashes with a wet noodle for me.