What Happens with the Second Loan
if My House is Foreclosed?

Provided that you are not paying them, you will most likely be sued by the second mortgage or Home Equity Line of Credit ("HELOC") lender. Even if you are paying them and have missed no payments, they can probably sue you anyway because by virtue of having lost the security for the loan (your house) you are likely in breach of your promissory note or deed of trust for the second loan.

That's pretty much it. They are not required to sue you nor are they required to sue you right away but they are definitely able to do so as soon as the house is foreclosed.

They have to sue you first (and win) but assuming that they sue and they win, they will most likely garnish your wages but they can also come after your assets (although that is less likely).

Filing bankruptcy can address many of the above problems. In a Chapter 7 bankruptcy, upon successful completion of the bankruptcy process, your obligation on the promissory note that went along with the 2nd mortgage is discharged (cancelled). In a Chapter 13 bankruptcy, you may be able to 'strip' the 2nd lien away from your property and only pay a reduced portion of the 2nd mortgage.

You have many options but waiting for them to sue you is a bad strategy. Then you end up with, in order, a foreclosure, a lawsuit, a wage garnishment, and then, finally, a bankruptcy. That is the worst order of events that you can have.

Call us before you head down that path.

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The Law Office of Matthew D. O'Conner is dedicated to helping clients file bankruptcy while retaining their dignity and pride. We provide assistance, legal counsel and advice and will be able to answer your bankruptcy-related questions and help you file a Washington bankruptcy.

Contact us today at (206) 782-0722 for a free consultation - it's entirely confidential.

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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

This web site is for general informational purposes only and is not legal advice.

The information contained on this web site is in no way intended as a substitute for legal counsel, and your receipt of the information does not give rise to a lawyer-client relationship between Matthew D. O'Conner and you. The ramifications of the law for any particular situation depend on a variety of factors, so you should seek professional legal counsel before acting upon any information contained on this web site.