If a second mortgage was taken out on a home and bankruptcy was declared and it was over 10 years ago, do they still have any claim to the money?

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If a second mortgage was taken out on a home and bankruptcy was declared and it was over 10 years ago, do they still have any claim to the money?

My mother took out a 2nd mortgage on her home and then declared bankruptcy, and this was about 10 years ago. She is know looking to sell but the debt collection agency is making a claim for the mortgage. She hasn’t given them anything in 10 years, my question is do they still have any right to the mortgage or can she just send them a cease and desist letter and be done with them?

Asked on May 13, 2012 under Real Estate Law, Illinois

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If your mother declares bankruptcy 10 years ago and received a discharge where the lender secured by the second mortgage on the home was named as a creditor and the debt was discharged in the proceedings, she does not owe on the debt particularly since she has made no payments on the second loan for many years.

The problem arises due to the second recorded lien remaining on the property if the bankruptcy court did not issue an order discharging the line and the order was recorded on the property that you are writing about. This remainining lien may impede a sale of the property to a willing buyer.

I suggest that your mother consult with an attorney who practices real estate and bankruptcy law with respect to how the second lien on the property can be removed from title of your mother's home assuming it can despite the fact that any claim for payment on the loan may have been discharged in the bankruptcy and if not, time barred by your state's statute of limitations as a debt personally owed by your mother.


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