Legal Question in Bankruptcy in Massachusetts

Due to circumstances beyond my control I had to file bankruptcy. I have a first and second mortgage which were dismissed. My 1st mortgage company has worked with me, and has given me a trial loan modification on which once I make my final payment, I will get the modification. Here's my question...I am trying to work out a modification with the HELOC. If they refuse to work with me, I know they have the right to foreclose on my home. If that's the case, I certainly don't want to do the loan modification with my 1st mortgage holder, because then if the HELOC forcloses, I will be liable for a house that I won't have. Should I complete the loan modification with the 1st mortgage company and hope that the HELOC works with me?

Asked on 8/22/13, 10:27 am

1 Answer from Attorneys

David Baker Law Office of David Baker

More information is needed. What chapter of the bankruptcy code did you file under? I assume you filed under chapter 7 and got a discharge. Also, what do you mean when you say the first and second mortgages were "dismissed"? I think you mean they were "discharged". Actually, your liability on the promissory note was discharged, but as you recognize, the lenders still have the mortgages, so it's a very good thing that the first mortgage is willing to do a modification. As to the second, if the HELOC lender won't play ball, you might have to do another bankruptcy case - under chapter 13 this time. Depending on the value of your property and the principal balance on the first mortgage, it might be possible to "strip off" the second mortgage in a chapter 13 case, which you can NOT do in a chapter 7 case, usually. You need to sit down with an experienced bankruptcy attorney to review the facts of your situation carefully.

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Answered on 8/22/13, 10:43 am

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