1st,2nd and 3rd Mortgage

November 11th, 2007 by Questions

I am bankrupt and have an apartment with negative equity. There are 3 mortgages; the first has about 83,000 owing, the second 40,000 and the third about 30,000. A relative is a guarantor on the first mortgage only. There are no guarantors for the second and third. The lenders are 2 different institutions. A similar property just sold for about 150000. I am not keeping the asset. My question is; what happens to the guarantor of the first mortgage, since a sale of the asset would easily pay for the first mortgage at least. What do the 2nd and 3rd mortgage lenders do? Do they pressure the first lender to sell?


One Response to “1st,2nd and 3rd Mortgage”

, A licensed trustee said:

You really should give your trustee a call – this is something that should have been clearly explained to you before you filed for bankruptcy.

Briefly, when a house has more than one mortgage, the debts arepaid off in the same order as the mortgages: the 1st mortgage is repaid in full, then the second, then the third. It sounds like the selling price will more than cover your first so you co-signer shouldn’t have anything to worry about.

Whatever portion of the 3rd mortgage (and even some of the second if the money is short) are treated just like your credit card debts and should be dealt with in your bankruptcy.

Give your trustee a call if you’re still not sure about how this is going to be handled.

Please post a follow up comment below:

(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)