Confused about 2nd mortgage

What is the name of your state? Virginia

I am in the beginning process of filing Chapter 7. My question is about discharging a home equity loan. I want to keep my house and continue payments on it. I owe $92,000 on the first mortgage and $45,000 on the second mortgage. The house was appraised for $112,000 so there will be no equity. The second mortgage was used to pay mainly credit card charges. Since the value of the home is less more than the mortgages, would the second mortgage be discharged? I am assuming from what I have read in this forum (which has been extremely helpful) that I definitely want to reaffirm the first mortgage, but am unsure about the scond. Any advice will be greatly appreciated. Thanks!

[Ladynred]

Unfortunately the answer is probably No.
You turned unsecured debt into secured debt when you took out an equity loan to pay the credit cards. If you don't have to reaffirm, don't, but if you don't keep making the payments, the lender for the 2nd mortgage CAN forclose on the property.

BIG reason why its usually not a good idea to pay off credit cards with home equity loans - now you can't get rid of it at all.

I have heard about the ch 20 (7/13), to strip the second mortgage away just to leave the house, as long as you are current. You might ask a lawyer, I asked mine and he didn't know what I was talking about. I read it somewhere on the internet so I don't know if it was true or not.

[HomeGuru]

Originally posted by eloqid
I have heard about the ch 20 (7/13), to strip the second mortgage away just to leave the house, as long as you are current. You might ask a lawyer, I asked mine and he didn't know what I was talking about. I read it somewhere on the internet so I don't know if it was true or not.

**A: there is still another way but only a few BK attorney's know how to do it.
Find the right one.

[bigun]

HomeGuru,

Are you talking about a cramdown?

[HomeGuru]

Originally posted by bigun
HomeGuru,

Are you talking about a cramdown?

**A: perhaps, but please explain the term for clarification purposes. I generally go to a hoedown in my neck of the woods. is a cramdown the same with fiddles, gitars, moonshine. ladies and dancin til dawn?

[bigun]

Hey!!! Who you calling a 'ho?????

I know at one time in the middle of the S&L debacle in the 80's when real estate prices collapsed in some area that bk lawyers were successful in getting 2nd mortgages stripped away when the petitioner was way upside down with the combination of 1st and 2nd {or more} mortgages.
Is that doable anymore or, is there another procedure?

Thanks to all who answered. I am still not sure I understand what a cramdown is??? I see my attorney tomorrow and wanted to be informed as much as possible. This forum has been very helpful and now I won't go in there appearing as if I know nothing about bankruptcy. As a matter of fact, this is very hard for me. I had perfect credit up until about two years ago and I am embarrassed to be in this situation. Some bad decisions, divorce, etc..I need a new start and plan to be much wiser in the future. So, I should ask the attorney about the second mortgage? Any other suggestions for my list of questions to take? I do have another question. I do know that Bankruptcy is open to the public if they care to look, but is it usually listed in local newspapers?? Once again, thanks for the help.

[azgrandpa]

brendab:

This is a partial quote, originally by bigun, that addresses that subject. Hope it helps!

Originally posted by bigun, 8/13/2002
You have 2 mortgages. The combined total is greater than the amount of equity in your home. The first mortgage has priorty. The second mortgage or a portion of it is now unsecured. **************.. It is refered to as stripping a mortgage or, in some cases executing a cramdown.

Sorry, Bigun, don't mean to step on your toes! Just thought it would help brendab.

[bigun]

No problem azgrandpa.
Where are ya homie? Am I close? Inquiring minds need to know!