Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
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Bankruptcy does not discharge a pre-existing lien on a property; it only discharges a loan or debt associated with the lien. So, for example, if you borrow 100k and give some one a lien on your house as collateral and let's say that your house is worth 70k; then a BK will discharge the 100k debt that you owe but the lender can still foreclose on the home to recover the 70k. However, the lender cannot take any of your other assets or otherwise try to collect on the 30k shortfall.
Your loan documents from the 2nd mortgage would verify that a lien was created and the amount. In other words those documents should contain a promissory note [which is the loan] and a security agreement [which is the mortgage or the pledging of the house as collateral [aka the lien]. A copy of that security agreement should have been filed with in the real estate deed records for the county in which the home is located. A secured creditor may enforce the lien to recover the property secured by the lien at anytime after there has been a default on the note and the BK is concluded or an automatic stay lifted.
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