Is it possible to remove a second mortgage lien after a bankruptcy?
October 10, 2008 - In 2001 we filed for bankruptcy, and put our house on it as well, and we had a second mortgage too, and of course, we put them on the bankruptcy as well. Well, the first mortgage talked us into taking the house back, but after the bankruptcy was discharged, we never heard from "The Money Store" again. The Money Store had our second mortgage. Well, we're in the process of selling our home, and we got a hold of the second mortgage lien holders to get the pay off. When we filed bankruptcy we owed the second right at 11k. They say we owe them 18k, because of interest... BUT said they'd be willing to take a settlement, and then after talking to the guy for a while it was clear that The Money Store wants all of my equity he can get. Wants me to have nothing. Can they do this, and how should we deal with these people?
- Yes, they have every right to collect the interest and attorney's fees because you cannot discharge the lien on the property and when you sell you'll need to pay off the 2nd mortgage in full. Sorry.
What you should have done was have the house appraised back when you filed for bankruptcy. If your first mortgage was higher than the amount the house was worth, you could have filed a POND motion to have the second mortgage wiped out. Since you or your attorney did not do this, you still owe the second mortgage because mortgages are considered secured debts, and are secured by the value of your home. If you don't pay them, they can foreclose. I'm surprised that The Money Store didn't foreclose since you weren't making payments to them, even though you were paying the first mortgage. If you sell the house, you have to pay the amount that the first mortgage is owed, and the amount that the second mortgage is owed. You also owe the accumulated interest and late fees due to the second mortgage. DId you sign any reaffirmation agreements with either of your mortgages? If not, and there isn't enough value in the house to pay off both mortgages, they get all the money you get from the house, and you walk away with nothing. Also, if you didn't sign reaffirmation agreements, you can just walk away from the house and lose whatever equity you have in the house. If you did sign reaffirmation agreements, if your house doesn't sell for enough to pay off both mortgages, you'll still owe the amount over the value that the house sells for. Hopefully, you didn't sign reaffirmation agreements.
if your house is worth more than what you owe, the money store should allow you time to sell the house and keep any profit after what is owed. sell the house to a friend as liens follow the property not the original holder and the money store will most likely offer a lesser amount to the new lien holder. (prob. amount owed minus interest.)
there might not be much you can do since you took your home out of the BK you would have still been responsible for making the payments on any liens attached. If they are trying to take advantage of the situation to get your equity they may be doing what is called "equity stripping" which they should not be able to do. you could try calling this number 1-888-359-8851 which is a group designed to help you protect your assets... not sure if they can help, good luck!
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