Legal Question in Bankruptcy in California

It would be really beneficial to have more facts than you provided to answer your questions. I cannot do so with the information provided, however, I can give you some basic direction as to what to look at to help you answer the questions.

1 - If the first mortgage forecloses the property, and insufficient sale proceeds are available at foreclosure to pay off the second mortgage, then yes there is a chance that the lender could come after you. First, you have to look at the question of whether or not your second mortgage was used to buy the property, or was a refinance after you bought. If it is the later, and the proceeds were not put into the house (i.e., a pool, landscaping, etc...) then you probably are staring at a loan that could come back after you.

2 - What chapter of bankruptcy to file is a very, very complex question, and one that you need to discuss with a qualified bankruptcy attorney. There are a myriad of possible options that could make one or the other chapter more attractive. Also be aware that your income may push you into having to file a chapter 13 over a chapter 7 bankruptcy.

3 - Frequently, yes, bankruptcy can resolve any outstanding debt from a home foreclosure, but again, there are a lot of factors to look at. You need to meet with a qualified, experienced bankruptcy attorney in the area where you now live, as that is the most likely place you would file. It may be possible to file in California, but your new location is probably more convenient to you.

4 - If you have the money sitting in the bank, and converted it from an exempt 401K to non-exempt cash, then yes, it may be subject to being liquidated by a trustee in a chapter 7. Again, you should meet with a local bankruptcy attorney as this is actually a question of law that is going to depend upon where you file bankruptcy.

5 - Finally, again, you want to speak with a local bankruptcy attorney. I generally do not recommend that anyone borrow money from an IRA before filing bankruptcy - I think you are just asking for trouble, but because exemption of assets you own is probably going to be a question of the local law, and not California law, you need to get an opinion from someone where you live.

Good luck, and I hope you will seek out some legal advice from someone qualified in your area. Most bankruptcy attorneys will give you an hour of free consultation, and in that hour you can probably answer a lot your questions.

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