Helping Minnesota Clients With Post-Foreclosure Debt

People who have a second mortgage and are facing foreclosure are typically unaware that only their first mortgage will be affected by the foreclosure. When that process is over, they will be left with the second mortgage and may be sued by the lender for the amount owed on the remaining note.

If you have a home equity loan, home equity line of credit or second mortgage, you may need additional help after foreclosure. You want an experienced bankruptcy lawyer to help you discharge this debt. Please call Prescott Pearson & Tande, PA, at 651-968-8096 or 888-366-0827 to schedule a free consultation.

Second Mortgage Debt

If you have two mortgages, you may think that foreclosure or a short sale will take care of both mortgages. However, the second mortgage will seldom foreclose or redeem and pay off the first mortgage. On a short sale, the lender will often only release its mortgage lien so that the property can be sold, but they will not release the liability on the note. Lenders will usually sue the individual on the note after the foreclosure by the first mortgagor or the short sale process by the individual.

A foreclosure by advertisement involves the bank selling the home via sheriff's sale. This type of foreclosure is not a lawsuit. Foreclosure by action is a lawsuit against the homeowner. You will be served with a summons and complaint in a foreclosure by action. Second mortgage lenders may sue you for the deficiency in a foreclosure by action. You may be able to discharge the second mortgage debt in bankruptcy, however.

In addition, if you are issued a 1099-C for cancellation of debt, the Mortgage Debt Relief Act may allow you to file a form 982 to exclude the amount from your taxable income. Talk to us to learn if your mortgage meets the criteria for the Mortgage Debt Relief Act.

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  • Minneapolis-St. Paul Area: 651-968-8096
  • Minnesota Toll Free: 888-366-0827

Please call us at the numbers above or contact us online to schedule a consultation.

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