My first mortgate holder foreclosed on my home in Oct. 2011. The 2nd mortgage holder came after me for payment-it was an HELOC that was used to pay off the original purchase loan. I was advised to file for Chapter 7 bankruptcy, which I did. But now, I doubt that it was legal for the 2nd to come after me, especially in light of current foreclosure law in California where the one action rule is in effect. Can I sue the 2nd mortgage holder for pursuing me into bankruptcy?
No. The HELOC was non-purchase money and was sold-out when the 1st foreclosed. You were personally liable for that obligation. It should have been listed in your Chapter 7 BK schedules as an unsecured creditor by you. You don't state how they "came after" you in the BK proceedings but the one-action rule has nothing to do with it under the stated facts.
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No, in California only if you had gotten a short sale approval would the second be barred from coming after you. Since the foreclosure happened and was done by the first mortgage, the second mortgage, an equity line of credit and therefore a non-purchase loan had legal right to collect from you any deficiency. The bankrutpcy filing stopped them but you can't sue them for having to file bankruptcy protection.
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