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  1. #1
    Join Date
    Apr 2010
    Posts
    7

    Default Responsibility for a Possible Deficiency Balance

    My question involves bankruptcy in the state of: Florida

    Last year I had my debts discharged in a chapter 7 bankruptcy filing. I decided to retain my home as I was working on a modification agreement on the 1st mortgage which was recently approved. I am planning on signing the modification agreement. By agreeing I am reaffirming the debt correct?

    My 2nd mortgage has been charged off. If I fail to make payments on the 2nd mortgage, at any time the lender can foreclose on my home as the 2nd mortgage lien still exists correct?

    If the home is foreclosed on sometime down the road, can I be held liable for a deficiency balance from the 1st and/or 2nd mortgage balances at any time (e.g. 2 years) down the road? The mortgages were discharged in the bankruptcy filing.

    Thank you.

  2. #2

    Default Re: Responsibility for a Possible Deficiency Balance

    You may want to consult a bankruptcy lawyer before you sign the reaffirmation agreement on your 1st mortgage lien.
    I had a chapter 7 in Florida this year, kept my home- BUT did not have a "2nd mortgage" on it. Florida has a generous "exempt" for homestead equity- so we chose the option "exempt" NOT "reaffirm" on the paperwork.
    But sounds like you changed your mind about keeping your home- so maybe that's why the "reaffirmation or modification" became an issue.

    My point is that I think you can only discharge a 2nd mortgage with a chapter 13- so your 2nd mortgage remains.

    But what I know as a fact is that if you sign a reaffirmation on the property-
    yes, you can be held liable for a deficiency amount if you default payment & foreclose.

    So, if you think you can afford the total mortgage payments now (the 1st & 2nd) then it's ok to sign & keep the house.

    The reaffirming the 1st mortgage makes you liable again for any deficiency in foreclosure. That is what I know from my bankruptcy lawyer.


    And you have to wait 4 yrs. after ch.7 to file a 13- But that may be an option for you down the road if you default on the property. But don't default before the 4 yrs. is up or you could have problems till the 4 yrs. passes.

    I hope you check with a bankruptcy lawyer on your situation. They usually have a free consultation available.

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