2nd mortgage and bankruptcy
If a 2nd mortgage was included in a bankruptcy and discharged. Do they still have a claim to the property?
We filed bankruptcy a year ago. We left out the first mortgage but included the second mortgage (home equity line of credit). It has been discharged, no one contested it and we haven’t received a statement or any other communication from them since. We want to sell the house now to our daughter. Does that 2nd mortgage company still have a claim to the property?
I assume that the home equity line of credit was secured by a Mortgage or a Deed of Trust. If that is the case, you have been discharged of this debt personally, but the second mortgage is still attached to the property and this loan will need to be paid off in full before the property can be sold to someone else with a clean title. The mortgage company typically will not contact you after a Bankruptcy, since they cannot require you to personally pay the loan. They do still retain the right to foreclose on the property, but in some cases they are not interested in spending the money to do that. The total payment due on the loan will include late fees and interest accrued since the last payment due on the loan. I would suggest first having a title report run to see if the loan still shows up on title (probably will). If it does, you may want to contact the bank to see how much they say is owed. You may be able to negotiate on the back interest and late fees.
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