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I have a lien on my home in Phoenix from a second mortgage…

Customer Question
I have a lien...

I have a lien on my home in Phoenix from a second mortgage that was charged off and discharged in a chapter 7 bankruptcy and also Discover Bank has a lien for almost $10,000 which was also discharged in my BK I am trying to refinance my first mortgage but the bank and title company both said I have to settle with them or pay it off

Lawyer's Assistant: What steps have you taken so far? Have you prepared or filed any paperwork?

What kind of paperwork should I prepare. Both parties ,Patelco Credit Union ,with the second and Discover both acknowledge that the debt was discharged in the BK (Patelco also state that the account was charged off ) but they say that they have the right to lien the property

Lawyer's Assistant: Have you talked to an AZ lawyer about this?

My son is an attorney in California and I have called a real estate attorney in AZ still waiting on a call back

Submitted: 3 months ago.Category: Real Estate Law
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Customer reply replied 3 months ago
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call.
Customer reply replied 3 months ago
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5/6/2018
Real Estate Lawyer: Barrister, Lawyer replied 3 months ago
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 43,101
Experience: 17 years real estate, Realtor. Landlord 26 years
Verified

Hello and welcome! My name is ***** ***** I am a licensed attorney and will try my best to help with your situation. There may be a slight delay in my responses as I type out an answer or reply.

.

There may be some confusion about what filing bankruptcy does.. It doesn't wipe out the debt and make it like it doesn't exist. It just means that you aren't personally liable for it. if collateral was used or a lien was placed against other assets, then those assets secure the debt. So if the debt isn't paid, the creditors can still collect on their debts if the debtor wants to do something with their asset, they have to pay off the debt.

.

For example, if someone has a mortgage on a house and files BK, and includes the mortgage, they don't end up with a free house... if that was the case everyone would do it... What happens is that the debtor is no longer personally liable for the debt, so the creditor can't garnish their wages or come after other assets and the debtor legally doesn't have to pay the mortgage. But since the house is secured by the mortgage, if they don't pay it, then the creditor can foreclose on the house and force a sale of it. They just can't come after the person for anything else.

.

As for "charge offs", that doesn't mean "forgiven". It is just an accounting trick where the creditor calls it a loss on their taxes so they can write it off. If they can later recover the debt, they then recognize it as income..

.

So when your debts are discharged in BK, you aren't personally liable for then any longer, but the assets the debts are secured to are still able to be foreclosed on if they aren't' paid.

.

.

thanks

Barrister

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Customer reply replied 3 months ago
Ok so what are my options?
Customer reply replied 3 months ago
i would appreciate it if you can tell me if I have any other options besides settling with creditors
Customer reply replied 3 months ago
I am not in a position to call you (financially) so thank you anyway
Real Estate Lawyer: Barrister, Lawyer replied 3 months ago

Honestly, you don't have any other options... They can just sit there and wait you out because there is no way you can do anything financial with the property... sell it, refinance it, borrow more on it... with those liens sitting there as no lender or buyer would agree.

.

So your only option is to try to settle the debts with the creditors for less than what they are asking and see if they will bite...

.

I am very sorry that I don’t have better news, but please understand that I do have an ethical and professional obligation to provide customers with legally correct answers based on my knowledge and experience, even when I know the answer doesn’t make the customer happy...

.

.

Barrister

Ask Your Own Real Estate Law Question
Real Estate Lawyer: Barrister, Lawyer replied 3 months ago

Hello again,

.

I just wanted to touch base with you and check in.

.

Did you have any further questions I can help with?

.

.

Thanks much

Barrister

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