Q: So in all BKs both 7 and 13, the note is set aside and discharged, personal guarantees are removed, no collection for payments can be done. If the BK is dismissed and not completed, then we are back to our original position.
A: In all bankruptcies? No. It is true in most bankruptcies. There are always exceptions in unusual cases. For example, the debtor may want to reaffirm the debt for some reason. Or maybe the debt can't be discharged because of fraud. But in most cases, the debt is discharged, and that precludes collection activity. Or, if the case is dismissed, then collection activity can begin again.
Q: During a Ch 13, the Note remains, but the TD or Mortgage might be removed or "stripped", leaving just the note. I assume that would only happen at the end when the BK is discharged.
A: At the end of the Chapter 13, the note would typically be discharged. The TD would remain, unless it can be stripped off due to a lack of any equity
to secure it. If it can be stripped off, it doesn't take effect until the plan is completed.
Q: A 1st TD or Mortgage will always remain on the property, even after a discharge.
Q: So at what time during this process can I start or complete a foreclosure?
A: If the note is not being paid, then you can either wait until the bankruptcy is closed, or if you'd like to start foreclosure proceedings before it is closed, then you can file a Motion to Lift the Automatic Stay
. This is basically a request that the court allow foreclosure proceedings because the note is not being paid. The court almost always grants the motion.
Q: In a bankruptcy, is a mortgage treated any differently than a trust deed?
A: No. They are both treated as secured debts. So far as bankruptcy is concerned, they are identical.
I hope that helps. Let me know if you need clarification.