Can I reaffirm the first mortgage and surrender the second mortgage on my home in a chapter 7 bankruptcy? 24 Answers as of May 15, 2013

How do I avoid the lien?

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Law Office of Sean P Fleming
Law Office of Sean P Fleming | Sean P Fleming
You cannot avoid such a lien in a Chapter 7 bankruptcy. Lien stripping is only possible in Chapter 13 bankruptcy.
Answer Applies to: Illinois
Replied: 5/15/2013
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
You cannot avoid the second lien in a Chapter 7. If you stop paying it, you risk foreclosure.
Answer Applies to: Indiana
Replied: 5/15/2013
William D. Cope, LLP
William D. Cope, LLP | William D. Cope
You cannot avoid, i.e., get rid of the second mortgage in a chapter 7 bankruptcy but you can in a chapter 13 bankruptcy if there is no equity in excess of the holder of the first. You will discharge the second in a chapter 7 bankruptcy and if there is no equity in the property in excess of the debt to the first, the second may be willing to remove its lien for a lump some payment through negotiations. I have on occasion been successful in negotiating such a result for clients.
Answer Applies to: Nevada
Replied: 5/15/2013
The Law Office of Marvin Wolf
The Law Office of Marvin Wolf | Marvin Wolf
Generally, lien avoidance for junior liens that are unsecured because the first mortgage exceeds property value is usually accomplished in a Chapter 13, not a Chapter 7 bankruptcy. For more information, you would need a formal consultation Disclaimer: Debt relief agent and bankruptcy attorney.
Answer Applies to: New Jersey
Replied: 5/15/2013
A Fresh Start
A Fresh Start | Dorothy G Bunce
Impossible. You can only remove a second mortgage by lien-stripping in a Chapter 13 bankruptcy. The Courts have held that they do not have the authority to lien-strip in a Chapter 7 bankruptcy. However, there can be other options to allow you to keep your home & eliminate the 2nd mortgage. But reaffirming the 1st mortgage isn't the way to go for many many reasons. Get to a competent bankruptcy attorney before you shoot yourself in the foot.
Answer Applies to: Nevada
Replied: 5/15/2013
    Law Office of D.L. Drain, P.A.
    Law Office of D.L. Drain, P.A. | Diane L. Drain
    You don't in a chapter 7. Normally that is done through the chapter 13 process. Please understand that bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step.
    Answer Applies to: Arizona
    Replied: 5/15/2013
    Rosenberg & Press
    Rosenberg & Press | Max L. Rosenberg
    There is only one way to discharge a second mortgage on a house that you own and that is a perilous and difficult process that I do not recommend. It involves the successful completion of a Chapter 7 bankruptcy and then subsequent to the discharge but prior to the closing, filing a Chapter 13 bankruptcy. Within the 13 you file a Motion to Determine the Dischargeability of a Secured Loan. The only way this works is if there is not one cent of equity to cover the second mortgage. There is a formal style Motion and a whole rigamarole that goes into this. If you are considering this, YOU NEED AN EXPERIENCED BANKRUPTCY ATTORNEY. You cannot do this alone.
    Answer Applies to: Connecticut
    Replied: 5/15/2013
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    No... you can't do that. Not reaffirming the second will not make it go away. AND there is no requirement to reaffirm mortgage debt under the bankruptcy code. The only way you might get rid of the second is in a ch13 case, IF the first mortgage more than the value of the property. You should see a lawyer about this.
    Answer Applies to: California
    Replied: 5/15/2013
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    No, you avoid the 2nd in a chapter 13 in NY, not in chapter 7.
    Answer Applies to: New York
    Replied: 5/15/2013
    Moffa & Bonacquisti, P.A.
    Moffa & Bonacquisti, P.A. | John A. Moffa
    What? No. It's the property you surrender not a mortgage!
    Answer Applies to: Florida
    Replied: 5/15/2013
    The Law Offices of Kristy Qiu
    The Law Offices of Kristy Qiu | Mengjun Qiu
    Depends on what jurisdiction you're in. Some jurisdiction allows lien stripping in chapter 7, meaning re-classifying your second mortgage as unsecured, and eliminate it along with your other unsecured debts. If you're in the Southern District of Florida, however, lien stripping on a real estate property is only possible through chapter 13, not 7.
    Answer Applies to: Florida
    Replied: 5/15/2013
    Troutman & Napier
    Troutman & Napier | Gregory A. Napier
    No, you cannot do that in a Chapter 7. The only possibility is IF there is zero equity left in the value of the home after subtracting the amount of the first loan (mortgage). If that is the case, then you can strip off the second loan (mortgage) in a Chapter 13.
    Answer Applies to: Kentucky
    Replied: 5/15/2013
    Michelotti & Associates, Ltd. | Joseph Michelotti
    That 2nd lien is like gum on your shoe. It never goes away. Usually you can negotiate it for 10 cents on the dollar. You might consider filing a chapter 13 after the chapter 7 is resolved (chapter 20) some districts allow lien strips. You might consider doing the 13 just for the lien strip.
    Answer Applies to: Illinois
    Replied: 5/15/2013
    Stephens Gourley & Bywater | David A. Stephens
    You can do it, but the lien of the second mortgage remains unless the mortgage company releases the lien voluntarily.
    Answer Applies to: Nevada
    Replied: 5/13/2013
    Law Offices of David A. Tilem | Michael Avanesian
    In California you can't do this. You have to file a subsequent Chapter 13 (this is called a Chapter 20 because 7 + 13 = 20). Anyways, if you're about to save a few hundred thousand dollars, it would be SILLY to not get an attorney to do this for you. Mistakes are FATAL!
    Answer Applies to: California
    Replied: 5/14/2013
    Idaho Bankruptcy Law | Paul Ross
    Currently, you cannot strip a second mortgage from your home in a Chapter 7. The second mortgage could never come after you for any amounts not paid, but the second still has the security interest against your property. In theory, you would pay down your first but the second would just accrue interest and take up more and more. The second could even still foreclose at some point, which will not have been benefit to you.
    Answer Applies to: Idaho
    Replied: 5/14/2013
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    You're not going to avoid the lien from the second mortgage in a Chapter 7 bankruptcy. You may only do that in a Chapter 13.
    Answer Applies to: California
    Replied: 5/14/2013
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    There is no such thing as avoiding a lien on a second mortgage in a chapter 7 bankruptcy. In some very specific instances, and only in a chapter 13 filing, a second mortgage loan may be valued at zero in a lien strip motion where the value of the property is less than the outstanding balance owed on the first mortgage. Why would you want to reaffirm the first mortgage on your home? It is not necessary, and will not do much good if you are unable to pay the second. It may well be a better choice to just retain and pay the first loan as agreed and to eventually try to reach some settlement with the lender on the second in exchange for the release of the lien.
    Answer Applies to: Colorado
    Replied: 5/14/2013
    Portland Bankruptcy Law Group
    Portland Bankruptcy Law Group | Christopher J. Kane
    No, you cannot strip a second mortgage off your home in Chapter 7. If you file Chapter 13, and if the home is worth less than what you owe on the first mortgage, making the second mortgage wholly unsecured, then you can strip off that second mortgage in Chapter 13. And you do not have to reaffirm the first mortgage.
    Answer Applies to: Oregon
    Replied: 5/13/2013
    Weber & Phillips, P.A.
    Weber & Phillips, P.A. | John G. Phillips
    In Arkansas and the Eighth Circuit, no. In a different Circuit, the answer may be different. Consult a local bankruptcy attorney to be certain how the law is interpreted where you live.
    Answer Applies to: Arkansas
    Replied: 5/13/2013
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    You cannot remove any mortgage liens in a Chapter 7 bankruptcy. You discharged your personal obligation to pay the debt, but if you do not pay, the lender can still foreclose on the lien. If you do not pay the second, the second may not foreclose now due to a lack of equity, but as the house becomes more valuable, it may at some point decide to foreclose on the lien when there is enough equity to foreclose and be paid from the sale proceeds.
    Answer Applies to: California
    Replied: 5/13/2013
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    Not in Chapter 7. The second lien can only be avoided in Chapter 13.
    Answer Applies to: California
    Replied: 5/13/2013
    The Bain Group, PLLC
    The Bain Group, PLLC | Brian Bain
    Unfortunately, Chapter 7 bankruptcy does not allow you to avoid mortgage liens on your primary residence. If you were to surrender the 2nd mortgage, then they could foreclose on the home and take subject to the 1st mortgage. There is a possibility that they would not do this, however, the lien will always remain and if you tried to sell, you would have to pay it off in full. A Chapter 13 bankruptcy on the other hand may allow you to strip the 2nd mortgage, but only if it is clear that the amount you owe on the 1st mortgage exceeds the fair market value of the home as of the date of the filing of the petition. Bottom line, if you want to keep the home, don't reaffirm either one and voluntary make your mortgage payments, no point in reaffirming a home loan unless you get incentives from the lender. If you think you can strip the 2nd mortgage and it is worth it to you, file Chapter 13.
    Answer Applies to: North Carolina
    Replied: 5/13/2013
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