Advice on Deficiency Balance and Bankruptcy - The Bills.com Blog

Bills.com Blog > Mortgage Questions > Deficiency Balance and Bankruptcy

Advice on Deficiency Balance and Bankruptcy

Question: I have a issue where my 2nd mortgage citi bank charged off while i was in the process of bankruptcy? I filed chapter 7 but was pushed into a ch 13. What will happen to the second if i save the home in BK Ch13, now that the loan was charged off. Is it possible that i can keep just the first mortgage countrywide. I live in SouthernCaliforina where i owe 470k on a condo now worth only 270K?

Answer: Given the complexity of your situation, and the possible negative consequences that could result from making an incorrect decision in these circumstances, I strongly encourage you to consult with an attorney in your area as soon as possible. Since you have filed for Chapter 13 bankruptcy protection, I assume that you have retained an attorney to assist you in resolving your debts. I encourage you to ask the question you have posed here to your attorney to obtain a legal opinion of the best course of action available to you. Since I am not an attorney, I am not in a position to provide legal advice such as is needed to resolve the problems posed in your question.

Generally speaking, I would encourage you to immediately contact the second mortgage holder to try to set up a repayment

plan on your second mortgage loan, because the mortgage holder could proceed with foreclosure if you do not bring the loan current. Again, you should consult with your attorney due to the fact that you are currently in bankruptcy proceedings, which may affect what actions the second mortgage holder can take against you. Your attorney should be able to tell you the best course of action available to you, and may be able to help you negotiate a repayment plan with your mortgage lender. If you would like to read more about bankruptcy, I encourage you to visit the Bills.com Bankruptcy Information page.

Given the fact that you owe so much more on your home than the property is currently worth, you may wish to consider selling the property and including any deficiency balance in your bankruptcy filing. In order to

sell the property for less than you owe, your lenders will need to approve a “short sale” of the home, meaning that the lender will allow you to sell the home for less that you actually owe. If your lenders will approve a short sale, you may be able to go ahead and sell the condo. It is unfortunate that you are stuck owing so much more money than your home is actually worth, but your bankruptcy attorney may be able to help you work out a plan to sell the property and resolve the remaining debt.

For more information about foreclosure, I encourage you to visit the Bills.com Foreclosure page.

I wish you the best of luck in resolving this situation, and hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com/blog

Also, make sure to get a free financial health check-up with Bills IQ!

Submit questions/comments about this post:

Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

Name (required)
Email (required never displayed)
Comments
	Please enter the characters you see in the image above.