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Are there lawyers that handle both bankruptcy and foreclosure issues?

Colorado Springs, CO |

A collection agency called me yesterday and said I am solely liable for a $35,000 second mortgage that never got taken care of in a prior foreclosure. My ex-husband is filing for bankruptcy and according to the collection agent, he had been "removed" from responsibility on paying back the second mortgage. I am not even sure the $35,000 is a viable debt. And I assume that if my ex-husband files for bankruptcy, any creditor on any joint debt would come after me for the entire amount.

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Attorney answers 4

Posted

"And I assume that if my ex-husband files for bankruptcy, any creditor on any joint debt would come after me for the entire amount." That is correct.

Your ex would have discharged HIS obligation on the 2nd mortgage, but not yours. So, assuming you both signed for the 2nd mortgage, you are liable.

Asker

Posted

Why wouldn't the second mortgage have been paid off when the foreclosed house was sold? According to the assessor, it sold for more than we owed on the first and second mortgages.

Matthew Scott Berkus

Matthew Scott Berkus

Posted

I can only speculate, but rarely is a property actually "bought" at a foreclosure auction. The 1st mortgage bid the property. If no one else bids (rarely does anyone else bid), the 1st mortgage assumes ownership of the property and the 2nd mortgage is legally destroyed, the 2nd mortgage doesn't get anything. When the bank bids the property, no money actually changes hands, it is a paper transaction. The only way a 2nd mortgage gets paid at a foreclosure auction is if a 3rd party actually bids and wins the bid for the property at the foreclosure auction. (super rare). So, if the 1st mortgage takes ownership, it can later sell the property. If it sells the property for more, it simply keeps the money because the 2nd mortgage lien was extinguished. After the foreclosure sale, the 2nd mortgage is free to pursue the borrowers personally for the debt.

Asker

Posted

Thank you for your response. Should I contact a bankruptcy lawyer or someone who also can look into the 2nd mortgage?

Matthew Scott Berkus

Matthew Scott Berkus

Posted

A bankruptcy lawyer can probably handle both because frankly, there probably isn't much to do about the 2nd mortgage, you probably owe it.

Posted

Yes -- there are such attorneys.

And Mr. Berkus is correct with his analysis.

In no way am I offering you legal advice, and in no way has my comment created an attorney-client relationship. You are not to rely upon my note above in any way, but insted need to sit down with counsel and share all relevant facts before receiving fully-informed legal advice. If you want to be completely sure of your rights, you must sit down with an experienced criminal defense attorney to be fully aware of your rights.

Asker

Posted

Why wouldn't the second mortgage have been paid off when the foreclosed house was sold? According to the assessor, it sold for more than we owed on the first and second mortgages.

Posted

Yes, there are many attorneys that handle both. My suggestion is that you contact a local attorney to discuss your situation in more details. Your general statement that joint debts would "come after you" is probably true but there are ways to address this and be proactieve about a solution going forward.

Asker

Posted

Thank you for responding!

Posted

The creditor will come after whoever they can as long as they can. Your husband's bankruptcy removed him as a target. If you file bankruptcy, you will be relieved from the debt. Otherwise, you will have to defend the suit or pay.

Most second mortgages get nothing in most foreclosures. In that case, you owe the amount of money you borrowed if you signed the note. Based on your description, it is very likely that the debt is valid and you owe it. You may want to consider filing bankruptcy yourself.

You can reach Harkess & Salter LLC at (303) 531-5380 or info@Harkess-Salter.com. Stephen Harkess is an attorney licensed in the state and federal courts of Colorado. This answer is for general information only and does not create an attorney client relationship between Stephen Harkess or Harkess & Salter LLC and any person. You should schedule a consultation with an attorney to discuss the specifics of your legal issues.

Asker

Posted

Thank you for your response. Should I contact a bankruptcy lawyer or someone who also can look into the 2nd mortgage?

Stephen Clark Harkess

Stephen Clark Harkess

Posted

Do you have an idea what exactly you want to "look into" and how much you want to spend looking? Do you have a reason to believe that you didn't sign the mortgage note or didn't borrow the money? How long ago was the foreclosure? If you have reason to believe that there is something to look for then it might be worth hiring an attorney to investigate. However, if you don't actually have a reason to believe you don't owe the debt, then you should focus on settling the debt or filing bankruptcy.

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