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If the seller's mortgage was forgiven as part of a type 7 bankruptcy,

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does the mortgage loan balance...
If the seller's mortgage was forgiven as part of a type 7 bankruptcy, does the mortgage loan balance still get paid off at closing or does the seller get all the proceeds of the home sale?
Submitted: 3 years ago.Category: Real Estate Law
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Answered in 7 minutes by:
6/11/2015
Real Estate Lawyer: Roger, Lawyer replied 3 years ago
Roger
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 31,954
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Hi - my name is ***** ***** I'm a Real Estate litigation attorney. Thanks for your question. I'll be glad to assist.
The chapter 7 bankruptcy discharges the DEBTOR of his/her liability for the debt, but the actual DEBT is not discharged or cancelled. In other words, the debt remains and is still a lien against the collateral.
Thus, the mortgage lien will be paid off with the proceeds from the sale and the home owner wouldn't receive any proceeds unless there is money left over after the mortgage is paid.
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