In order to receive a discharge of your planned-for debts in Chapter 13
, you must pay all plan payments according to the plan (aka, "full compliance discharge"). The debts that are discharged are those that are actually "provided for" (paid) in the Ch. 13 plan.
Many times, debtors do not list their mortgages in their Ch. 13 plan, because if the mortgages are listed, the debtor's cannot afford the payments, and the court won't confirm the plan.
If you provided for your 2nd mortgage in the bankruptcy plan, and you make all of your planned payments, then the 2nd mortgage will be discharged, and you will have no further "personal" obligation to pay, even if the property is foreclosed after bankruptcy.
If you did not provide for your 2nd mortgage in the bankruptcy plan, then whether or not you make all of your planned payments, the 2nd mortgage is not discharged, and the creditor can attempt to collect from you on any deficiency balance after foreclosure -- or, by court action without foreclosure.
In your circumstance, the creditor has charged off the debt. This means that the creditor has determined that the mortgage is uncollectible, and reported that fact to the IRS
, by sending a 1099-C to you and to the IRS. However, this does not prevent the creditor from selling the debt to a debt collector. In almost every case, the creditor will sell your debt to a debt collector, and the debt collector may decide to try to collect from you, via legal action. This assumes that you did not provide for your 2nd mortgage in your Ch. 13 plan. If you did provide for the 2nd mortgage, then the debt collector cannot sue you -- because the debt is discharged. The only recourse would be foreclosure, and if the 2nd mortgage is underwater, due to the property's low fair market value, then no foreclosure will occur.
I realize that the above is fairly complicated. Feel free to ask for clarification if you do not understand anything I've just discussed.
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