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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2891
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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My parents own their home and another ( Rental ). Eight years

Resolved Question:

My parents own their home and another ("Rental"). Eight years ago, my parents declared bankruptcy. The mortgage holder on the Rental was notified, but missed its response period and never appeared or responded in bankruptcy proceeding. I think this may have occurred because my parents had tried a consolidation/refinancing shortly before the bankruptcy and that may have caused confusion as to the Rental's true ownership. Regardless, the mortgage holder did not respond and the bankruptcy was discharged. My parents have made many calls to the holder in the last 8 years to resolve this. They have continued to pay the property taxes on the Rental and are owners of record on the county's assessment roll. First, does the Rental belong to my parents, or the mortgage company? If it belongs to them, my parents would like to sell it, but the mortgage holder will not respond to requests to either release the title or adjust the county tax rolls to take "official" ownership. Tips for resolution?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
HI and thanks for your question. This is a popular fact pattern I see.
The property is still your parents, but the lender retains it's lien on the property. Bankruptcy only discharges the debt, your parents are no longer required to make payments on the loan. Since the lien does not get stripped off, if they wanted to keep it, they would need to make payments on the loan and/or work something out with the lender. If they do not, the lender would need to foreclose on the loan to transfer title back to the lender. Since your parents are the owners, they are responsible for the upkeep and any assessments if there is a homeowners association. Your parents can still sell it too, but they would pay off the mortgage from the closing proceeds, because the lien remains on the property. Unfortunately, they cannot force the lender to foreclose or release their title, it remains a valid lien until it is paid or foreclosure. Thanks for your question, good luck to them.
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