I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including https://www.atlanta-bankruptcy.com and an Atlanta bankruptcy blog, https://www.thebklawyer.com/thebkblog. Please mention Bankruptcy Law Network when you call.
I live in Georgia. If my 1st mortgage goes to foreclosure, what happens to my second mortgage?Here are my thoughts: if the holder of a first (or senior) mortgage forecloses, all junior mortgage liens are wiped out. However, that does not mean that the debt goes away â€“ it just means that the first lender gets the property free of the junior claims. The junior lender no longer has the property as security, but the second mortgage lender can still try to collect from you. Holders of defaulted second mortgage notes are often very aggressive, but they also know that their chances of collection are limited. After all, if you couldnâ€™t pay to keep your home, how much money are you likely to have to pay another debt? They also know that they will get nothing if you declare bankruptcy. This means that you can often settle for 10% to 30% of the debt. Keep in mind that the creditor in all likelihood is an investor who bought bundles of notes from failed financial institutions, paying pennies on the dollar.