Posted by: admin in chapter 13 bankruptcy info on
Jon M asked:
I have had great financial difficulty this past year, and have fallen behind on many of my obligations, due to drastic income loss. I was behind on my 2nd mortgage, and was trying to work out a loan modification with them, when I called today to find out the status, they informed me that my loan is now closed and charged off. I think I understand what that means, that is a banking term and I am still liable for that debt. My question is; is this debt still a lien on my home, and if is not, can I file it in my chapter 7 bankruptcy? The bank told me that they would not forclose on the home. I have tried to research this, but not finding any luck with the questions I have. I spoke with my attorney, and she said that I would have to file a Chapter 13, or else the 2nd mortgage would forclose…Does any one have any information, or gone through a simular situation?
FYI, my home is not worth as much as I owe, so the 2nd wouldnt get their $$, even if they forclosed.
Thank you David. Now, do you know if the bankruptcy court will see me as behind on my second? The bank is now not concerned will collecting the late payments, but wants to set up a payment plan with no interest. Can I do that and not include this loan in the bankruptcy? I know I can reaffirm it, but with this now a charge off account, I am not sure how that works.
Tags: Chapter 7 Bankruptcy, Bankruptcy Court, financial difficulty, File Bankruptcy, Loan Modification I have had great financial difficulty this past year, and have fallen behind on many of my obligations, due to drastic income loss. I was behind on my 2nd mortgage, and was trying to work out a loan modification with them, when I called today to find out the status, they informed me that my loan is now closed and charged off. I think I understand what that means, that is a banking term and I am still liable for that debt. My question is; is this debt still a lien on my home, and if is not, can I file it in my chapter 7 bankruptcy? The bank told me that they would not forclose on the home. I have tried to research this, but not finding any luck with the questions I have. I spoke with my attorney, and she said that I would have to file a Chapter 13, or else the 2nd mortgage would forclose…Does any one have any information, or gone through a simular situation?
Thank you David. Now, do you know if the bankruptcy court will see me as behind on my second? The bank is now not concerned will collecting the late payments, but wants to set up a payment plan with no interest. Can I do that and not include this loan in the bankruptcy? I know I can reaffirm it, but with this now a charge off account, I am not sure how that works.
First, I’m sorry to hear of your difficulties. You are right that the term “charged off” is limited how the bank treats your loan on its books (it no longer carries that amount as an asset). This in no way relieves you of the debt or removes the lien from the property. It is still a secured loan.
The fact that the lender has made the business decision not to pursue a foreclosure (because it has determined that the value of the house does not exceed the balance of the 1st mortgage plus selling costs) does not mean it will be discharged in a Chapter 7 bankruptcy. That is probably why your attorney suggests that a Chapter 13 will be needed to restructure your secured and unsecured debt.
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