Hey, but don’t you lose most all your other assets in a bankruptcy? I don’t know bankruptcy. I suppose if you don’t have many assets to lose anyway, bankruptcy could work.
Any BK lawyers out there?
For many borrowers, this makes a Chapter 13 bankruptcy a better choice than a foreclosure. With a foreclosure, the borrower loses the house – and the 2nd lien holder might still pursue the borrower (unless they release the lien for some compensation, like under HAFA).
With a bankruptcy – under certain circumstances – the borrower keeps the house, and the 2nd lien is converted to unsecured debt and does not have to be paid in full. This is probably part of the reason for sharp increase in bankruptcy filings.
Boy, I don’t get this at all.