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Bankruptcy Law/Equity line of credit and chapter 7

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Expert: - 5/26/2009


Question
QUESTION: The judge denied the reaffirmation agreement on our equity line of crdit and our bankruptcy was just discharged. What are the ramifications if I stop paying the 2nd mortgage. Our first mortgage is $225k and our 2nd is for 50k. The value of our house is 250k.

ANSWER: If you stop paying your second mortgage, they can exercise whatever rights they have under the Deed of Trust/Promissory Note and the laws of your state.  Usually this is foreclosure.

---------- FOLLOW-UP ----------

QUESTION: O.K. so the bankruptcy does not absolve us from the debt?

Answer
If you received a discharge of the debt, then you no longer have a legal obligation to pay on it.  But that has nothing to do with the lien they have against your property.  Bankruptcy does not affect the lien, unless specific steps are taken to avoid the lien during the bankruptcy case (which is not possible for voluntary liens against real property).  If they foreclose, you will not owe anything if there is a deficiency balance after the sale.

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Mark J. Markus- California Bankruptcy Attorney

Expertise

Mark J. Markus is a Los Angeles bankruptcy attorney who has practiced exclusively bankruptcy law in California since 1991 and is rated A+ by the Better Business Bureau and is AV-rated by Martindale-Hubbell. He represents debtors, creditors, and Trustees in Chapter 7, Chapter 11, and Chapter 13 of the bankruptcy code throughout California.

Experience

Visit our California bankruptcy webpage at http://www.bklaw.com for more information on bankruptcy in general and Mark J. Markus in particular. Many questions are answered on the web page (hint, hint).
The Markus webpage also contains more information on

  • Which Chapter to File,
  • business bankruptcy,
  • chapter 7 bankruptcy,
  • chapter 11 bankruptcy,
  • chapter 13 bankruptcy,
  • Do You Need a Lawyer to File Bankruptcy?
  • Frequently Asked Bankruptcy Questions

    Also visit our Los Angeles bankruptcy blog for interesting articles and much more.



    Organizations
    Central District Consumer Bankruptcy Attorneys Association (CDCBAA) Los Angeles County Bar Association (LACBA) Commercial Law & Bankruptcy Section of the Los Angeles County Bar Association Financial Lawyers Conference (FLC) National Association of Consumer Bankruptcy Attorneys (NACBA) Los Angeles Bankruptcy Forum (LABF) American Bankruptcy Institute (ABI) San Fernando Valley Bar Association (SFVBA)

    Publications
    Central District Consumer Bankruptcy Attorneys Association Newsletter September 2007 (Vol. 1, Issue 2)

    Education/Credentials
    J.D., University of Arizona 1990. B.A. Economics, California State University, Northridge 1986. For more details please click here

    Awards and Honors
    AV Rated by Martindale-Hubbell (http://www.martindale.com) A+ Rated by Better Business Bureau

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