Is a chapter 13 my only recourse if my second mortgage holder wouldn't refinance my loan? 17 Answers as of August 31, 2015I was unable to pay it regularly for over 3 years. They wrote it off but I still made small payments. Now they sold it to an investor not a mortgage company, who want to charge me tens of thousands more than was written off. Can they do that?
Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
Mortgage loans get bought and sold all the time. The current holder of the loan can charge you whatever they are entitled to under the promissory note. A chapter 13 bankruptcy MIGHT help you, but what can be accomplished will depend upon the value of your home and the outstanding balance on your first mortgage. If the home is worth more than the balance on your first, you will have to be able to propose a chapter 13 plan that will completely cure the arrearage on the second mortgage. If the value of your home is less than the balance owed on your first, then it may be possible to "strip off" the second mortgage loan through a completed chapter 13 plan. You really need to sit down with an experienced chapter 13 lawyer to review your situation.
Answer Applies to: Colorado
The Law Offices of Ryan F. Beach, PLLC | Ryan Beach
Chapter 13 may be your only option for dealing with the delinquency on the second mortgage. You need to sit down with a bankruptcy attorney to discuss your situation in detail to see how Chapter 13 could help you and what your alternatives are. Chapter 13 may give you several options for dealing with the second mortgage, such as curing the delinquency over a 36 to 60 month period of time while protected from foreclosure, or stripping the second mortgage from the property and treating the loan as a unsecured debt. If possible, stripping the loan may be the best option. A stripped mortgage would be treated as an unsecured debt and paid a percentage of what is owed. The unpaid percentage would be eliminated or "discharged" upon plan completion and/or discharge. While treating the loan as a stripped mortgage the automatic stay would protect you from foreclosure or other collection efforts by the second mortgage company. Again, you need to sit down with a bankruptcy attorney and discuss your situation to see what is possible.
Answer Applies to: Michigan
The Law Office of Darren Aronow, PC | Darren Aronow
Writing it off just means they are "writing it off" their books. Does not mean you do not still owe the money. You could file a chapter 13 to either repay or if there is no equity, then to strip, or remove, the second mortgage.
Answer Applies to: New York
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Yes.... when they "write if off" that is just an in house determination to sell it to a collector. You need to see local counsel. It "might" be that you can "strip id off". This can be done when the first mortgage is more than the property value. (this issue is before the United States Supreme Court right now).
Answer Applies to: California
Eranthe Law Firm | Cate Eranthe
If a debt is "written off" it only means it comes off the lender's books. It's an accounting term. If the debt is forgiven then a 1099 is issued to the IRS and you receive a copy of it so that you can pay the taxes on the forgiven debt. It was not forgiven since it was sold. Over time the amount will increase with interest and costs of collection. This can be a substantial increase. Please go see a local knowledgeable lawyer who can advise you. There are likely several options and more facts are needed to determine what they might be.
Answer Applies to: California
A Fresh Start | Dorothy G Bunce
You probably need an accountant to look at this situation to determine if the amounts you have been quoted are accurate. The fact that a loan was listed as a charge off does not mean that it was written off, nor does it mean that the creditor isn't entitled to foreclose on the property, so yes, they can do that. In a Chapter 13, you might be eligible to lienstrip, to pay off just the mortgage arrearages, or to pay off the entire 2nd mortgage.
Answer Applies to: Nevada
Davis Law SC | D. Nathan Davis
Your question has many different possible answers based upon answers to certain questions. That need to be addressed. If is possible that Chapter 13 may be the only answer. However, recently argued in the Supreme Court of the United States was an issue that could also affect any answer. If the response is favorable to debtors, a Chapter 7 bankruptcy might also work for you. You need to contact a bankruptcy attorney. Bankruptcy may have very different results based upon only a small difference in the answers to certain questions. Thinking you will have the same result as a friend had may not be the result in your case.
Answer Applies to: South Carolina
Barnes Law Firm, LLC | Aunna Peoples
More specific details are needed to properly advise. You need to speak to a bankruptcy lawyer that does Chapter 13s on a regular basis to see what can be done with the second mortgage. Your attorney will want to know if there is any equity in the home above the first mortgage.
Answer Applies to: Missouri
Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
Probably the new holder can try to charge you for amounts written off by a prior holder of the note unless the prior holder wrote off a sum of money as part of an agreement with you, for which you gave some consideration (i.e. payment or its equivalent). In a Ch. 13, you can generally clear away a second mortgage IF you can prove to the court (through a certified appraiser) that the value of the property is LESS than the balance due on the first mortgage. In other words, the second mortgage must be entirely without any value to which to attach. Consult your Ch. 13 lawyer on how to do this, and if you have not yet retained a skilled Ch. 13 lawyer, you really should do so now. Good Luck.
Answer Applies to: Wisconsin
The Orantes Law Firm | Giovanni Orantes
When a company writes off a debt, it is doing it for its internal purposes only, such as to take advantage of tax offsets and to comply with accounting principles. It has no legal significance to the borrower. Indeed, if anything, it makes it more likely that when the company sells the loan, the new owner will be more aggressive in collecting. The loan purchaser buys the rights of the original lender, which had a right to accrue interest, late fees and often attorneys' fees and costs. In addition, with a second mortgage, the purchaser has the benefit of the lien.. So, the conclusion is that the purchaser is well within its rights to charge the tens of thousands more by which the loan has been increasing each day since you stopped paying it. In addition, a Chapter 13 filing may enable you to get some relief as to the junior loan but the extent of the relief will depend on the value of the real property, which may have been increasing in value and now may be secured with some collateral. If this is your principal residence, if the junior is secured by even only a small amount ($1!), you would not be able to treat it as unsecured and a Chapter 13 may only allow you to resume payments and cure the arrears. The bottom line is that you need to consult an expert Chapter 13 attorney immediately as your rights may change drastically from one day to the next.
Answer Applies to: California