Fontana, CA asked in Bankruptcy for California

Q: What are the legal ramifications if I choose to stop paying my second mortgage?

My ex filed chapter 7 on our second mortgage in 2013. It is discharged with the bank but I have continued to pay it. I live in CA and not sure what the law says about it.

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4 Lawyer Answers

Harlene Miller

Answered
  • Bankruptcy Lawyer
  • Irvine, CA
  • Licensed in California

A: In general, the personal liability for the mortgage was discharged. Thus, the lender cannot request payment from the borrower. However, the bankruptcy does not eliminate the lien that the mortgage lender has on the property. Thus, it is secured on the property. If the property is sold, the second would have to be paid in full. If payments to the second stop, the lender could proceed with a foreclosure process. If you are a co-borrower on the second mortgage, the lender can seek payment from you personally since you apparently did not file bankruptcy. I recommend talking with an attorney for more legal advice on these issues.

Timothy Denison agrees with this answer

Peter Maurice Lively

Answered
  • Bankruptcy Lawyer
  • Culver City, CA
  • Licensed in California

A: Foreclosure is the biggest risk of not paying a loan secured by your real property. When you stop paying a loan secured by your residence a foreclosure trustee's sale may ultimately take away your title (ownership) interest. you may or may not owe anything to the junior lender after the foreclosure sale is completed.

Whether or not you are personally liable on a home loan often depends upon whether you obtained the loan to purchase your primary residence or whether you obtained it at subsequent date - a home equity line of credit ( HELOC) for example. California law provides certain protections to borrowers regarding purchase money loans for their principal residences under California Code of Civil Procedure Section 580 (commonly known as anti-deficiency law).

You should consult with an experienced attorney for a review of your loan documents, your budget, and that determination of your options.

Timothy Denison

Answered
  • Bankruptcy Lawyer
  • Louisville, KY

A: If you are living in the property and do not pay it, the bank can foreclose. If you signed on the mortgage and did not file bankruptcy, you are still liable for payment.

Theodore Allan Greene

Answered
  • Bankruptcy Lawyer
  • Sacramento, CA
  • Licensed in California

A: This is always confusing for even some lawyers. You have received some very good answers. You really should sit down or by phone talk to an experienced attorney about your situation. There is a lot of different factors to consider - like your equity position and what you plan to do long term with the property. I have helped 100's of homeowners in very similar situations. I give free consultations and you should expect the same when calling an attorney. Get as much competent information as you can and then you can make an intelligent decision on how to move forward.

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