Debtors who find themselves in serious financial trouble may have or will soon have several liens placed on them. A lien is a recorded document that states that the Debtor owes the creditor a certain amount of money. Once recorded, the lien will attach to any real property owned by the debtor in the County it was recorded. By recording this obligation, the creditor reserves the right to collect their money if the Debtors ever sells the property before the debtor gets the money. This lien is very similar to a First Deed of Trust or Second Deed of Trust that a standard mortgage lender might file before they lend additional funds. Many borrowers with combination mortgages are making efforts to negotiate a loan modification agreement on the 1st mortgage while attempting to settle the 2nd mortgage. Second mortgage settlements are being reported from lenders holding notes on properties that have declined so significantly that the lender is willing to settle on the 2nd mortgage for a small percentage of the outstanding balance. The mortgage lenders have decided that in these cases nobody wins with a foreclosure or bankruptcy. Debt settlement and forgiveness remains a separate issue when attempting negotiate credit card debts for less than agreed.
The creation of a lien is a very powerful tool for the creditors. Specifically, this lien may survive the Debtor’s bankruptcy. This means that the Debtor may discharge the debt during bankruptcy but if the Debtor ever sells property, the lien will still be paid because it is attached to the property and not to the debtor.
It may be even possible, under the right conditions, that a second mortgage can be stripped from the property. Read the original article> http://www.californiabankruptcylawyerblog.com/2009/01/san_jose_attorney_talks_about.html
