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mmdesq, Attorney
Category: Bankruptcy Law
Satisfied Customers: 518
Experience:  Attorney with 13 years experience.
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Am I responsible 2nd deed of trust and note after a full

Customer Question

Am I responsible for a 2nd deed of trust and note after a full discharge through bankruptcy?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  mmdesq replied 1 year ago.

Good Afternoon,

I'm going to try to help answer your question.

I am assuming that you filed a chapter 7 bankruptcy from which you received a discharge. If you retain the home then you must continue to pay any second mortgage in addition to the first mortgage as it is a lien on the property. Even though you are no longer personally liable if you retain the home you must continue to make payments on any liens associated with the home if you wish to keep it. If you did not retain the home and surrender it as part of your bankruptcy then you will not have any obligation for the second mortgage or any liens on the property.

I hope this information is helpful and I wish you the best of luck.

Customer: replied 1 year ago.
I don't believe you really answered the question. I received a full discharge of all liability. I continued to pay the 1st to live there. I want to sell but don't know if the second can still collect after 3 years. It was my understanding that the 2nd could no longer collect after 6 months loosing their claim. Can they still collect after a full discharge when I sell?
Expert:  mmdesq replied 1 year ago.

If you are still in the home and paying the first mortgage you are correct that at this stage the second lien will be out of luck. Thank you for clarifying the fact pattern.

Customer: replied 1 year ago.
I'm sorry. Your answer of "retaining" confuses me. I didn't renew a mtg with the 1st (or2nd), retaining? I'm trying to find out if the bankruptcy did not satisfy nor discharge the obligation of the mortgage/deed of trust lien secured to the property. I don't think I made my question clear enough. I just want to enable to sell my home and find out if I'm going to get hit with the 2nd at that time. Please help .
Expert:  mmdesq replied 1 year ago.

Ok, thanks for the clarification. A bankruptcy will never satisfy a lien. The only way a lien is satisfied is when it is paid in full. A bankruptcy does discharge your personal obligation with regards ***** ***** first or second mortgage, or other lien. Thus, your personal obligation on the second mortgage is discharged but the lien remains against the property. The only way you would not be required to pay this at the sale is because the bank did not pursue collection within 6 months. Bear in mind that while in bankruptcy their efforts to collect are stayed unless they obtain relief from the stay. If 6 months has elapsed since discharge you should be good. The other advice you need is from a title company as that is who will actually have to sign off on what does or does not need to be paid in accordance with title insurance. Sometimes even though you may be legally able to not pay the second mortgage lien a title company may not be willing to sign off and issue insurance unless it is paid. I know that sounds unfair but I would suggest you resolve that question as well. If you are utilizing a realtor I would inquire what title company they use and pose the question to the title process closer as well just to be abundantly careful.

Customer: replied 1 year ago.
Thank you. I will check with the title co. I'm satisfied with your help. 100 percent
Expert:  mmdesq replied 1 year ago.

Your welcome.