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You can't pick and choose what debts are included in a bankruptcy filing. When you file bankruptcy, you're filing bankruptcy on all of your debt. During a bankruptcy filing state law only allows protection up to $137,000 of equity on a homestead property unless you've been there 40 months. Also, any liens on the property still have to be fulfilled. It's not like you can declare bankruptcy and then stay in your house for free because the mortgage gets wiped away. Since it is secured property, you will have the choice of either continuing to pay what you owe or surrendering the property to the lienholder(s).
Attempting to work with your mortgage holder to try to rewrite the terms of the mortgage would be a better choice, as bankruptcy could end up causing you a lot more problems when all your other nonexempt assets are liquidated. If you choose to stop paying your second mortgage, they still have the right to foreclose on your home just like if it was all one mortgage.
Thank You for your response.
Please let me clarify.
I have been here for 20 years.
I only owe 31000.00 on first mortgage.
I have paid down my second mortgage to 110000.00.
I can't afford to pay payments on second mortgage.
I owe a total of 141000.00 for both. are you still saying that i can't bankrupt the second mortgage and just make payments for the first?
I owe a total of 141000.00 for both. are you still saying that i can't bankrupt the second mortgage and just make payments for the first?
That's exactly what I'm saying. You can't "bankrupt" a loan. You can only declare bankruptcy as an individual, which in Florida is under either Chapter 7 or Chapter 13. Chapter 7 is liquidation of assets to pay creditors while Chapter 13 is reorganization of debt (but the debtors aren't going to get less than they would have gotten had you liquidated under Chapter 7). The common denominator with any type of bankruptcy filing is that ALL of your debts and assets are identified and are a part of the bankruptcy proceeding. The notion that you can pick and choose which loans to declare bankruptcy on is, quite honestly, just laughable.
If you have been in the home as long as you say you have and built up equity, your first option should be attempting to combine both loans into a single mortgage with a payment you can afford. That may mean taking out a new 30 (or even 40) year mortgage, however it's what you have to do if you do not want to lose the house and cannot pay your current loans.
If you can't or won't do that and also cannot afford to pay what you currently owe, you simply will lose the house if you can't find a way to supplement your income. In addition, having such a large second mortgage and a small primary mortgage means that you took cash out of your home for whatever reason. If you did that in order to make big ticket purchases like cars, boats, or other real estate, understand that the company has the right to go after those as well and most likely will.
This could be a very ugly situation for you, and the best way of dealing with it is simply going to be to try to find a way to pay what you owe. There is no easy way out that is going to let you just walk away from the second mortgage and keep everything you currently own. It just doesn't work that way. None of these people who default on their mortgages get to keep their house, so why would you? Do you think the fact that it's a second mortgage makes things any different? It doesn't. It's still a lien on your property that must be fulfilled one way or another. It's not going away as long as you own that house. You can always contact an attorney who specializes in bankruptcies and completely lay out your financial situation out for him. It will cost you some money, but you're going to share more information with him and get better answers than you're going to find on the internet.
I guess the OP is doing some creative thinking in his best interest while having used all the cash and now trying to bail out on everybody...just like Obama is teaching many people "spread the wealth around" as long as it isn't yours!
Why declare bankruptcy at all? Refinance both loans into one and pay your debt.
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