NC is a non-recourse state I understand that but what happens if you have a second mortgage?
Monday, 16. August 2010
Both loans are with the same bank/company? Can they still get you for the second one, I know they can’t for the first and will/do they even take the time to go to court? The second loan is right at 15,000 I think might be just a little bit more but not by much. An we owe 89,000 left on the house after 10 years.
Wolf Harper Says:
I’d agree the second is probably a recourse loan, I won’t agree that it’s a sure thing they’ll go after you in court. Lenders are in the business of lending, and as such they get a lot of defaults. They know all to well you "can’t get blood from a stone", even with a court judgment.
The problem is, it costs a lot to go to court. They can easily have $5000, $10,000 of court costs… and then the borrower also has to spend money they don’t have defending themselves… and all this lawyer money is money poured down a hole, that can never be gotten back. And THEN, they get into court and what happens? The judge calls them into chambers and yells at them for cluttering up his court with a nonsense case they should have settled. Happens all the time.
OK so finally they get a court judgment. What happens? PIFF, the borrower declares bankruptcy. That’s more money the borrower is giving to lawyers instead of to the bank. So you can see why very often, suing someone is a losing game for the bank.
Sometimes, all you have to do to make a debt go away, is wait for the statute of limitations to run out.
But remember — anytime a company formally forgives (writes off) a debt, the IRS treats that as INCOME, and wants income tax on it. So figure if you have $15,000 written off, count on owing between $3000 and $5000 to the IRS and the state. They’ll want cold hard cash, naturally. And if it’s a big fraction of your annual tax bill, they’ll also want quarterly payments.
Ryan M Says:
Second mortgages are RECOURSE loans. Yes they will take the time to take you to court if you stiff them. If someone owed YOU $15k….would YOU let them get away with it??