Tuesday, March 1, 2016
What Happens to a Mortgage After a Bankruptcy Discharge?
Recently, I had a client ask me what happens to the mortgage on their current home when it is discharged
pursuant to a bankruptcy order. Contrary to what you might initially think, A debt that is secured, such as a mortgage, is
dischargeable BUT if you want to keep the house or other secured asset, you have to pay the debt as you normally would. A
discharge simply means that it eliminates the DEBT on the property, not the LIEN. So, if you were to stop making payments
on the debt that has been discharged on your home, the bank can repossess the property, but it cannot pursue you for the money
that is owed. As long as you remain current with the payments, you can stay in your home as you normally would.
7:55 pm cst