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CA Lawyer
CA Lawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 1655
Experience:  Bankruptcy Attorney
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I am in foreclosure and have filed to chapter 7 bankruptcy.

Resolved Question:

I am in foreclosure and have filed to chapter 7 bankruptcy. I have 4 lien on the current property being foreclosed on and I know that the 1st will be the only one to get paid. What will happen to the other 3 lien holders? Will they become unsecured dept. and will be written off. I so, why can’t I negotiate with the 1st lean holder to keep my property.?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  CA Lawyer replied 7 years ago.
In a Chapter 7 bankruptcy, the law does not allow you to remove junior lenders from being secured.

However, your personal liability is extinguished by the discharge order when you receive it. That means they can only go after the property.

In a Chapter 13 Bankruptcy (its possible to convert to Chapter 13), it is possible to remove junior lenders as secured creditors if they are ENTIRELY UNSECURED. That means that if you owe more on the First than the house is worth, the junior liens could be stripped off in a Chapter 13. This cannot be done in a 7. The lien stripping procedure is complex and I would recommend hiring an attorney if you plan to do this and don't already have one. In a Chapter 13 it is possible to pay a large portion fo the attorneys fees in the Chapter 13 repayment plan.



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Customer: replied 7 years ago.
I want to keep the property, but It appears to me that I would be better to buy the property at the forclouser sale, when I know the 1st lean hold will be the only one to get paid? becuse right how I would have to satisfy all of them to keep my house.
Expert:  CA Lawyer replied 7 years ago.
That is correct. However, the same result could be achieved (potentially) by converting to Chapter 13 and stripping off the junior mortgages. (It might cost more in attorneys fees, but it could also be hard to finance a purchase at the foreclosure sale given the recent bankruptcy.



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