Re: Secured vs Unsecured debt.

Posted by Jim V on February 14, 2003 at 20:28:28:

In Reply to: 2nd mortgage/Home Improvement loan posted by red on February 14, 2003 at 18:57:04:

: 1st mortgage foreclosed. I had a home improvement loan that I am still paying on. I thought in the foreclosure that all liens against the property was either paid or wiped out. Question: Do I suppose to still pay even after the foreclosure? Please help.

When a first mortgage forecloses, the junior loans are wiped from the title of the property. The debt does not disappear, it just becomes unsecured debt, similar to credit card debt. So, the previous homeowner ends up with a debt from a home they no longer own. Non-payment of that debt will ding your credit, but with a recent foreclosure already on your credit, it won't hurt that much. Chapter 7 bankruptcy can eliminate your need to pay the debt.

On the flip side, paying the debt will start the credit rebuilding process from the damage done by the foreclosure.

Follow Ups:

Name    : 
E-Mail  : 
Subject : 

Comments:
: : 1st mortgage foreclosed.  I had a home improvement loan that I am still paying on.  I thought in the foreclosure that all liens against the property was either paid or wiped out.  Question:  Do I suppose to still pay even after the foreclosure?  Please help.

: When a first mortgage forecloses, the junior loans are wiped from the title of the property.  The debt does not disappear, it just becomes unsecured debt, similar to credit card debt.  So, the previous homeowner ends up with a debt from a home they no longer own.  Non-payment of that debt will ding your credit, but with a recent foreclosure already on your credit, it won't hurt that much.  Chapter 7 bankruptcy can eliminate your need to pay the debt.

: On the flip side, paying the debt will start the credit rebuilding process from the damage done by the foreclosure. 


Optional Link URL : 
Link Title        :