If your 2nd mortgage is discharged can you still keep your house?

If you granted a lien on your home that lien will stay in place until either you pay it, or the lender agrees to remove it or a court orders it removed. That is why we use chapter 13s to "lien strip" second mortgages when the property is worth less than the debt owed to the first lender. Please understand that a chapter 13 bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. Most Arizona bankruptcy attorneys offer a free consultation about the basics of bankruptcy.

I don't know without more information. If you filed a motion to take away the 2nd's security interest because it was underwater and none of the second was secured you should be fine. Contact you former attorney to see how the 2nd was handled in cour.

A bankruptcy discharge eliminates your legal obligation to pay a debt. It does not eliminate a lien. So if a creditor has a lien (such as a mortgage or car loan), that lien survives a bankruptcy and the creditor can take legal action to repossess the collateral (home or car). The creditor can not sue you personally for the debt. They can sue you (and must sue you in some cases) to get their collateral back, but they cannot get a money judgment against you. When a debtor takes out a second mortgage, the borrower gives the lender a lien on the home at the time of the loan. In some bankruptcy cases the lien of a second mortgage can be stripped. Generally the first mortgage must be for more than the fair market value of the home. In that case since there is no equity in the home to be collateral for a second mortgage, the court can "strip" the mortgage and make it an unsecured debt. If that happens the lien is eliminated and the discharge combined with the lien strip avoids the debt completely.

If you had a second mortgage before filing for bankruptcy, they most likely already perfected their lien on your house before the bankruptcy, probably around the time that you took out the second mortgage. If they didn't, and then they try to perfect their lien after your bankruptcy, then they are violating the bankruptcy discharge. However, most banks perfect their liens very quickly. It's always possible that they made a mistake and didn't perfect their lien until later, but it's unlikely. It's also unlikely that the second mortgage was stripped off in your chapter 7 - while your personal obligation on that loan is discharged, the lien still exists on the house, and most bankruptcy courts do not allow you to strip off a second lien in a chapter 7 bankruptcy, though it is possible to do in a chapter 13 under certain circumstances. The person you spoke with may be laboring under a misunderstanding - many people choose not to pay their second mortgage if the value of their house is significantly below the balance left on the first mortgage. In that case, there is often nothing the second bank can do except wait for property values to increase and hope they can eventually recoup their losses. This is a risky approach, however, as that second mortgage lien will stick around and will eventually have to be paid if you ever want to sell the house, and it can become a risk if you pay down the first mortgage and the second lien gets some equity in the house that makes foreclosure an attractive option for them.

A mortgage is a lien. They don't have to place a lien on your property. You already placed it there yourself. A discharge in a chapter 7 case does not discharge a mortgage lien. It only discharged your promise to pay according to the promissory note you signed along with the mortgage. The mortgage still exists as a claim against the home but not against you.

The discharge of the note (debt obligation) does NOT invalidate the mortgage lien on the property.