Many times, people who are in the need of money, opt for a second mortgage on their home. While filing for bankruptcy under chapter 7, you included both the mortgages in your debts. If you reaffirmed the first mortgage to keep your home but didn’t reaffirm your second mortgage, when you get your bankruptcy discharge, you will be able to keep your home without worrying about 2nd mortgage. Well, according to lawyers of Dallas based bankruptcy law firm Recovery Law Group, that’s not true!
This is because even though you aren’t liable for the 2nd mortgage, it still has a lien on your house. Every time you take a mortgage, the company has a lien on your house to secure their interests. In case you default on payments, the mortgage companies have a right to foreclose on your home. When you file for bankruptcy, only the financial responsibility for 2nd mortgage was removed and not the lien they had on your home. This gives the 2nd mortgage company a right to foreclose on the property if you default on further payments.
If you wish to keep your home, you need to ensure that you end up settling your 2nd mortgage before you either sell your home or the 2nd mortgage company forecloses on the property. the primary concerns while settling your 2nd mortgage is your house’s current worth and the amount you owe on your primary mortgage. In case you don’t pay your 2nd mortgage and they opt for foreclosing on your home, then, in order to hold the property free and clear, the 2nd mortgage company will be required to pay off the 1st mortgage. If what you on 1st mortgage are less than your house’s worth, the 2nd mortgage company might not foreclose on the home. If this is your current situation, then you are in luck as your home won’t be foreclosed by the 2nd mortgage company. You can utilize this time to save money to repay your 2nd mortgage. If you are current on your mortgages, you can continue making payments.
However, if you decide to sell your home, it is important to settle the mortgages before completing the deal. In case the 2nd mortgage is not yet settled; you can opt for either of these options:
- If the total mortgage owed (first and second) is equal to the value of your home, then you can sell the property and pay off the mortgages in full, from the money.
- If the value of the home is not much and you will be able to pay only the 1st mortgage, then you need to access how to manage your 2nd mortgage. You can either negotiate a settlement or pay what you owe on the 2nd mortgage.
Whatever your situation with respect to a mortgage, you need to consult experienced bankruptcy lawyers to help you get out of bankruptcy with your property. You can call 888-297-6023 to discuss your situation.