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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2841
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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My wife and I have been discharged from chapter 7 bankruptcy

Resolved Question:

My wife and I have been discharged from chapter 7 bankruptcy since December 2009. We have a loan modification on our 1st mortgage, $210,000. We have a 2nd on the property, categorized as a consumer loan, but secured to the property, $115,000. We're are unable to modify the 2nd, as it is considered a recovery file. The second makes no attempt to collect, considering their 2nd position and are open to a payoff offer. The property is valued around $280,000. My logic? tells me that offering 20 cents on the dollar would be acceptable considering what they would receive if we forced a foreclosure. I am assuming? that between the market, foreclosure expenses and that we are no longer personally obligated to these debts ( loans not reaffirmed ) that this kind of offer may stand a chance. Thank you for a professional opinion.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 5 years ago.

Terry L. :

Hi and thank you for your question. In the future, you can request me to answer any further questions.

Terry L. :

You are correct, as they are unlikely to recover any money any time soon, and may wish for a payoff.

Terry L. :

You should speak to your accountant to confirm there will be no taxable income as a result of their discount.

Terry L. :

It shouldn't be, since the debt was discharged, but because they are releasing their lien, it could be taxable as forgiveness of debt.

Terry L. :

It would really depend on if they are needing capital, since the lien will stay on the home, and must be accounted for in a refinance or sale.\

Terry L. :

Never hurts to make an offer, so go for it

Terry L. :

thanks for your question, good luck

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