If our second mortgage was discharged during a bankruptcy, do we still have to make payments?

If we do not make payments, can the lender foreclose on our home?

Asked on December 3, 2013 under Bankruptcy Law, Indiana

Answers:

Terence Fenelon / Law Offices of Terence Fenelon

Answered 7 years ago | Contributor

You don't mention whether your bankruptcy was a chapter 13 or a chapter 7.  If you filed a chapter 13, the lien of the second mortgage company may have been avoided.  Such a result is not obtainable in a chapter 7.

I have to disagree with the previous answer to your question.  If the second mortgage was discharged, you have no personal obligation to make payments and you can not be sued for a monetary deficiency.  However, in the absence of a lien avoidance, the creditor maintains its right to foreclose on the collateral (your house) and take posession.  The chances of that occuring depends upon numerous factors which I will not delve into at this time.

The term discharge merely relate to your PERSONAL relationship with the creditor.  It does not discharge the "in rem" obligation, which attached to the property.

Anne Brady / Law Office of Anne Brady

Answered 7 years ago | Contributor

If the mortgage was discharged, you do not have to make payments and the lender can not foreclose, but that is a huge if.


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