Bankruptcy only removes your obligation to pay the money under the note you signed when you signed your Note and Mortgage.

Think of a Note and Mortgage as two chains. The first chain is the Note. Its legal effect is that the bank or other lender has a chain between itself and your wallet. They have the right to make you pay money by suing you to collect the money from you.

The second chain is a tie between the bank and your home. This is the legal effect of a Mortgage (but in very simple terms).

A Chapter 7 or Chapter 13 bankruptcy discharge entered at the end of your case, cancels, or cuts the chain between the bank and your wallet. You no longer have the obligation to pay.

However, it does not mean that the mortgage lender loses its rights in your home or other real property as collateral. The bank can still foreclose on your home if they are not paid. This applies whether you have a first, second or multiple mortgages on your home. One of them will want to foreclose in order to get paid.

If you sell your home but have not dealt with your second mortgage, you will need to pay the mortgage off when you sell the house.

Do you have questions? Please contact our office. We look forward to speaking with you.