If you recently filed for a Chapter 7 bankruptcy, you are probably hoping that this action will allow your creditors to discharge your debt and allow you to start off on a new financial road to better credit and better spending habits. Yet even if you are in a bankruptcy and are currently free from creditors' harassment and threats of garnishing your wages and repossessing your home, you still may have some complications to work out. For example, you may want to determine what to do with a second mortgage If that mortgage was written off and given to a credit collection agency, then you may have some situations to work through.

A second mortgage is an additional mortgage taken out on a property that has already been mortgaged. It is a secured loan that tis typically subordinate to another loan against the same property. These mortgages are subordinate because if the loan goes into a default with the first mortgage will need to be paid off before the second mortgage can be. Second mortgages are risky for lenders and come with high interest rates as a result. In most cases, a second mortgage is a home equity loan and can last up to 30 years at the most. A person who is a second lien holder can foreclose on a home if the homeowner stops making payments, even if there is no equity in the home. A second lien holder can also foreclose even if the homeowner is making payments to the first mortgage holder.

According to Fox Business, if you are in a bankruptcy, a second mortgage lender has no right to sue you for owed debts. As a bankruptcy filer, you will receive a discharge on your second mortgage in your Chapter 7 bankruptcy. If you never reaffirmed the second bankruptcy loan that you had, a lender has no right to sue you or try to enforce the loan again. You would have had to reaffirm the loan while you were in bankruptcy in order to re-establish any liability in connection with the debt. Some men and women may decide to reaffirm a loan in order to continue on those payments and keep the property that is associated with the mortgage. Yet if you did not reaffirm the loan, then you do not have to make any more payments, and as a result will probably lose possession of the land in the future.

If you don't want to lose possession of your land, then you will have to pay loans on your home or property, despite the fact that the actual debt has been discharged. This is because if you have a second mortgage, it means that you have also taken out a first mortgage at some point in the past. When you established both mortgages, your bank placed a lien on your home. Now, you have a double lien on your home which can only be cleared with repayment of the loan. In some states, a lender has the right to sue a homeowner for failing to pay on either or both loans regardless of bankruptcy.

While in some cases bankruptcy may eliminate a lenders' right to sue you, it will not remove the liens from the property. You will have to pay the loans in order to have these liens lifted. If you want more information about second mortgages and your bankruptcy, then an attorney can assist you. You will want a local bankruptcy attorney to show you the legal implications of your bankruptcy on assets and loans such as a second mortgage. Use this directory to discover a bankruptcy lawyer near you who can help you out!