Rising Home Values Create Problems For Those With Discharged Second Mortgages

Home prices are going up.  As a consequence people who filed Chapter 7 Bankruptcies are finally above water and many are looking to sell their homes at a profit.  Unfortunately those with second mortgages are finding that the lenders will not release their liens without getting paid.  Even more importantly, the lenders are allowed to collect interest on the loan even though the debt has been discharged in Bankruptcy.  Why is this?

All mortgages have two parts, the loan document or promissory note, and the lien on the property.  If you walk away from your home, you will never have to pay the second mortgage, however, if you want to sell the home the mortgage company still has a lien on the home and they are entitled to the mortgage plus interest.

If you file a Chapter 7 bankruptcy with a second mortgage its a good idea to negotiate a settlement with the mortgage company to get rid of the lien, as soon as possible.  If you don’t that $10,000 second mortgage may require a payment of $20,000 or more when you try to sell your home after Bankruptcy.

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Bankruptcy Attorney serving Grand Rapids Michigan and all of Western Michigan

Website: http://www.grandrapidsbankruptcylaw.com/demo