Users' questions

What happens when you pay off first mortgage but still have a second?

What happens when you pay off first mortgage but still have a second?

This is certainly possible, but once you pay off your primary, your secondary loan will take first position. Basically, the second mortgage holder allows the new lender to pay off the primary mortgage and jump ahead into first position, leaving the second lender in a subordinate position.

Can a 2nd mortgage be removed in Chapter 7 bankruptcy?

If you still own the home, then you still have that 2nd Mortgage Lien called a Trust Deed or Mortgage on your property. Chapter 7 Bankruptcy does not remove that kind of lien from your house, not in the 9th Circuit Appeals Court’s jurisdiction.

What happens when your second mortgage becomes a charge off?

Repeated failure to pay the loan despite contacts from the collections agency will lead toward severe consequences. You will be notified in writing when your second mortgage is officially listed as a charge off. Then, you will be contacted by a collections agency.

When do you have to pay your mortgage after bankruptcy?

You have to be two years after the bankruptcy (with extenuating circumstances), but you have to be three years after a foreclosure. Even though there will not be a foreclosure on your credit report, there will be one on the land records, and a mortgage lender will check there, too.

When do you get a 1099 for a forgiven mortgage?

If you have previously filed a bankruptcy and then the 2nd mortgage lender cancels the debt and sends a 1099 for the “forgiven” balance next year, then you are able to deduct the amount because it was already previously “forgiven” or when you filed your chapter 7 bankruptcy and received your chapter 7 bankruptcy discharged. 6.

How to get rid of second mortgage in Chapter 13 bankruptcy?

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.” Read on to learn about how you can use lien stripping to remove your second mortgage lien from your house.

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 second mortgage be charged off after a foreclosure?

While the second-mortgage lien was eliminated, the debt associated with the second mortgage was not. Instead, it became unsecured debt. Then, after you stopped making payments on your second mortgage, your second mortgage lender eventually determined that the debt was uncollectible and decided to charge it off.

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.