Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.
There is no strip off of the loan in a chapter 7 unfortunately.
If the debtor surrenders the property, all mortgages will be discharged in the chapter 7.
If the debtor files a chapter 13, there are options for that 2nd mortgage.
Since the loan is wholly unsecured, the loan can be paid down at the chapter 13 plan percentage.
This is often 10% or so, depending on the other facts in the case.
At the end of the plan, the loan is stripped off of the deed.
Plans can go from 10% and up to 100% depending on assets, and disposable monthly income.
Do you have any questions?
If I understand correctly even though the equity loan is unsecured and if it wasn't paid there is little the creditor can do the loan amount can not be discharged in chapter 7bk?
The loan can be discharged in the chapter 7, but the lien will remain on the title to the home.
There isn't a lot that they can do, since if they foreclose, there wouldn't be any money for them to get.
They will likely sit back and wait for sale, at which time it must be paid to clear title.
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