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Ray, Lawyer
Category: Bankruptcy Law
Satisfied Customers: 40977
Experience:  30 years in civil, probate, real estate, elder law
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We live in Nevada. We filed a chapter 7 in 2012. The

Customer Question

We live in Nevada. We filed a chapter 7 in 2012. The Bankruptcy is still open. Our return checks expired and had to be reissued by IRS.
We had 2 tax returns with refunds totaling approx $50k. The trustee is dispersing to our creditors in January. We did not reaffirm any of our debt, although we are still in our house, and we are current on our first. We have not paid anything towards our second. We are upside down on our house.
My question is this. I spoke to bank today regarding our second mortgage. They have written off the balance of $145K. They said we can start making payments and since they wrote it off all the payment will go to principle.
If the trustee pays any amount to the bank for our 2nd mortgage, does that release the lien on the property, or can the bank come after us and call the note if at anytime the house has equity as long as we are living in the house?
Submitted: 9 months ago.
Category: Bankruptcy Law
Expert:  Ray replied 9 months ago.

Hi and welcome to JA. Ray here to help you today.Please bear with me a few moments while I review your question and respond.

Expert:  Ray replied 9 months ago.

Here the debt in Chapter 7 is discharged then you are free of it.You then have right to reaffirm the two notes on the house.If you do not then either one may file for foreclosure and take the house back, there is no deficiency action because the debt was discharged.You will need to be discharged from Chapter 7.If this has been pending that is an extraordinary amount of time.Normally 12 months or so for a Chapter 7 to complete it and be discharged.

You only start paying on the house notes if you want to reaffirm here.If you want to give it up don't pay either one of them.If house is underwater you are able to walk away here.They can foreclose but that's it.I would strongly consider that if you are severely underwater as the debts are gone upon discharge , they can only take the house.You can live there until foreclosure and eviction is complete and save the funds.

Make no payments unless you intent is to keep the house and reaffirm the notes.

I appreciate the chance to help you today.Thanks again.