Terry L. : Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.
Terry L. : Yes, Oregon has a 6 year statute of limitation period on debt collection.
Terry L. : 6 years would start when the payments start.
Terry L. : For mortgages, the liens stay on the property, so they can just foreclose to transfer back if you don't pay. It doesn't work the same way as debt collection.
Terry L. : As for bankruptcy, if you file chapter 13, you can treat the 2nd mortgage as unsecured, if it is wholly unsecured (meaning the balance on the first is greater than the property value) if so, the debt will be paid the same rate as your unsecured creditors, and would be disharged, and stripped off at the end of the case.
Terry L. : In chapter 7, the liens stay on the home, even if you don't reaffirm the debt (keep the debt) so they can foreclose whenever there is equity, or if you are in default on the loans.
Terry L. : The liens will always remain, and the lender will foreclose to transfer the property back to them, even if they don't sue to collect payment, they can collect possession instead!
Terry L. : Hope that helps, let me know if you have any other questions.
Terry L. : Thanks
Terry L. : Terry
Customer: On your comment "6 years would start when the payments start"...that is part of my confusion. There were never any payments on that purchase. Payments were not mandatory for the first two years. I don't understand then when that 6 year period starts...at the time of purchase, or two years later when the road when payments the were mandatory.
Terry L. : 6 years from the date the first payment is due
Terry L. : since no payment is due for the first 2 years, the statute doesn't start running till that time period ends.
Terry L. : So, the clock starts ticking on the date the first payment is due.
Terry L. : Any other questions?