Bankruptcy & 2nd Mortgage

Even with a Chapter 7 discharge, you may be eligible to apply for a mortgage modification through HAMP (Home Affordable Modification Program) -- you don't need to be behind in your mortgages to appyto apply, you just have to get the mortgage company to agree that you are in imminent danger of default, which you should be able to establish due to the loss of income. Under HAMP, you can't just modify your second mortgage, you must be approved for a HAMP modification on the first and then, if the servicer of your second mortgage also participates in the Second Lien Modification Program, then it must modify the second mortgage or accept a payoff from the federal government. You have to be persistent in applying for HAMP --keep copies of everything you send to the servicer and be prepared to send them again.

I've put the link to the making homes affordable website, you can use it to find out if your mortgage is eligible for HAMP and whether your servicer (the company you send your mortgage payments to) is participating. You might also want to try to contact a HUD-approved counselor for assistance; you can one through the same site.

As long as your house is worth less than what you owe, it is unlikely that the 2d will try to foreclose on your house. This is because if they foreclose, they will have to pay off the first mortgage before they see any money. As long as the property value stays low, your finances are tight, and you want to keep your home, your priority should be keeping current on your 1st.

You might want to keep in mind that four years after you filed your Chapter 7, you can file for a Chapter 13 and strip off (or at least reduce) your second mortgage, as long as the property is still worth less than both mortgage combined.

good luck!