New Member
Posts: 4
Registered: ‎12-13-2012
Re: How Settling a 2nd Mortgage After Bankruptcy Affects Your Credit
[ Edited ]

grassfeeder wrote:

Yestac wrote:

We have a 2nd mortgage that was dischagred in bankruptcy.  Now the lender has offered a settlement that is considerably less than what is owed.  What I'm wondering is how the settlement will affect our credit.  The offer letter says that they will report it as "settled for less than owed." Since it was discharged, though, can it even be reported?  Any advice would be helpful!

I was in this very same position a few months ago.  I was advised by my attorney, that if I wanted to keep the home - to not reaffirm the mortgage - and settle the second one.  Note, I was current on my first and delinquent on the second - so technically they 'could' foreclose on me based on that - settling the second drops the likelyhood considerably.  I only owed 17.5 on my second and settled for $1,250.00 - note, you're in the drivers seat, counter their offer with one even lower.  You should be able to get out of it really cheap as any money they pull from you is all gravy as you're free and clear based on the BK.  


As far as the language.  It will stay IIB, regardless of what they say it will report as - once it's IIB, it stays IIB.  I had that same stipulation with mine and my language has not changed at all.

Thanks for the info!  I just can't seem to get a straight answer from anyone, so this was  big help!  With the 2nd being discharged and then settled, what were the tax implications?  I've been told that since it was dishcarged, we don't have to count the "difference" as income.  Is that what you've been told?