What happens if your second mortgage is discharged?

In that case since there is no equity in the home to be collateral for a second mortgage, the court can “strip” the mortgage and make it an unsecured debt. If that happens the lien is eliminated and the discharge combined with the lien strip avoids the debt completely. * This will flag comments for moderators to take action.

Can a second mortgage be stripped off in Chapter 7?

It’s also unlikely that the second mortgage was stripped off in your chapter 7 – while your personal obligation on that loan is discharged, the lien still exists on the house, and most bankruptcy courts do not allow you to strip off a second lien in a chapter 7 bankruptcy, though it is possible to do in a chapter 13 under certain circumstances.

Can a 2nd mortgage foreclose on a 1st mortgage?

Therefore, if the value of the house is high enough, then your 2nd mortgage lender can foreclose that lien, but in order to do so, it must pay off the 1st mortgage and any unpaid property taxes first. Some Things You Can Try Include, But Are Not Limited To: 1. Refinance Your Second Mortgage: Yes, it may be an actual option.

Can a second mortgage be removed in Chapter 7?

It’s Fast, Easy and Guaranteed. While it is true that you may be able to strip these off of your home in a Chapter 13, in a Chapter 7 you can’t, but, you may still be able to effectively ignore it (for a while) and keep your home. However, the 2nd Mortgage or Heloc would still have a lien on the property.

What’s the difference between a first and second mortgage?

A lien or security interest is wholly unsecured if the equity in your property does not cover any of the lien amounts. For example, say your home is worth $500,000, your first mortgage is $550,000, and your second mortgage is $50,000.

What makes a second mortgage a wholly unsecured lien?

So they would include second or third mortgages, HELOCs, and home equity loans. What does wholly unsecured mean? A lien or security interest is wholly unsecured if the equity in your property does not cover any of the lien amounts. For example, say your home is worth $500,000, your first mortgage is $550,000,…

What does it mean when a loan is discharged?

Discharged loan debt does not automatically cancel lien. Discharged loans are a form of discharged debt. Simply defined, a discharged loan is when an outstanding debt has been forgiven. Nearly all loans can be discharged under the right circumstances, though the most commonly discharged are student loans and home loans, or mortgages.

When does a lien stay in place on a second mortgage?

If you granted a lien on your home that lien will stay in place until either you pay it, or the lender agrees to remove it or a court orders it removed. That is why we use chapter 13s to “lien strip” second mortgages when the property is worth less than the debt owed to the first lender.

Can you get a home loan after a second mortgage?

This BLOG On Home Loan After Second Mortgage Charge Off Guidelines Was UPDATED On July 10th, 2018 Mortgage loan borrowers can qualify for home loan after second mortgage charge off with no waiting period after the charge off depending on the mortgage loan program.

Can a lender touch a second mortgage charge off?

Many mortgage lenders will not touch anyone with a second mortgage charge off. Lenders may give borrowers a last minute mortgage loan denial when the underwriter reviews the second mortgage charge off.

How can I get rid of my second mortgage?

If your house has gone down in value since you bought it, a Chapter 13 bankruptcy may help you to get rid of your second mortgage. This is done through a process called “lien stripping.”

What happens when you take out a home equity loan?

When you have a mortgage on your home and you want to get a new loan with better terms and pull out some cash, you might do what’s called a cash-out refinance. You get a new mortgage that’s larger than the balance on your current one, with the balance paid to you in a lump sum of cash.

What is second priority mortgage?

Second Mortgages and Lien Priority. A second mortgage is a loan you take out using your house as security that is junior to another mortgage (a first mortgage). A few common examples of second mortgages are home equity loans and home equity lines of credit ( HELOCs ).

How to refinance a home equity line of credit?

Home Equity Line of Credit Reverse Mortgage FHA Loans VA Loans Cash Out Refinance Resources Current Mortgage Rates How does a mortgage work? How much should you put down on a house? Minimum mortgage requirements for 2021 How to refinance your mortgage Home Equity Loan vs. HELOC Mortgage Lender Reviews Loan Officers Directory Calculators

Can a second mortgage be used to foreclose a home?

Second mortgage foreclosure is a possibility for your lender if you don’t pay your loan. The bank may start proceedings if you have equity. Otherwise, they will sue you and get a judgment to collect in other ways. A home equity loan is secured.

What happens if you default on a second mortgage?

If you don’t keep up with payments and there is equity in your home, then the bank will sell your property. Don’t think that your house is safe if you pay your primary and let your secondary home loan default. Your secondary lender will foreclose regardless of the status of your primary home loan.

What happens to a charge off mortgage in a foreclosure?

A charged-off loan—unlike forgiven debt—is still considered an obligation that you must pay. When the first-mortgage lender foreclosed on your home, the second mortgage was also foreclosed and that lender lost its security interest in the real estate. (Learn more in What Happens to Liens and Second Mortgages in Foreclosure?)

Can a debtor object to a discharge in Chapter 7?

In chapter 7 cases, the debtor does not have an absolute right to a discharge. An objection to the debtor’s discharge may be filed by a creditor, by the trustee in the case, or by the U.S. trustee.

What to do if debt collector pursues after discharge?

What to Do If A Debt Collector Pursues After Discharge? 1 Step One. : If you have a bankruptcy attorney, tell the debt collector to contact your attorney. 2 Step Two. : Simply tell the debt collector you have an order of discharge from the bankruptcy court and give them the date and case number. 3 Step Three. …

In chapter 7 cases, the debtor does not have an absolute right to a discharge. An objection to the debtor’s discharge may be filed by a creditor, by the trustee in the case, or by the U.S. trustee.

Can a domestic support debt be discharged in Chapter 7 bankruptcy?

But remember that domestic support obligations such as alimony or child support are not dischargeable in Chapter 7 or Chapter 13 bankruptcy. Example: If a family court judge requires you to pay a joint credit card in your divorce decree, you have an obligation to your former spouse to pay off that debt.

What kind of debts can not be discharged?

Debts that are not discharged include most secured and non-consumer debts such as your house, car, and real estate. Other debts that are not discharged include debts for certain taxes, government student loan debt, tax debts from the last four years, alimony, and child support.

Can a mortgage lender collect a discharged debt?

If you are just giving the house up, you are not liable on the note. If you want to keep it, you must pay for it. If the debt was not reaffirmed during the bankruptcy, then it was discharged. You have no legal liability for the debt, and they can’t sue you on it.

When do you have to deal with your 2nd mortgage?

If the value is relatively close to the balance on 1st mortgage then you will have to deal with the 2nd mortgage sooner rather than later because in not too much time, the value of the house will go up high enough for the 2nd mortgage company to be able to foreclose. If you cannot afford to settle it, you should consider trying a loan modification.