Latest Posts
Home > Ask The Get Out of Debt Experts > Do I Have to Pay My Second Mortgage Home Equity Loan After My Bankruptcy? – Julie

Do I Have to Pay My Second Mortgage Home Equity Loan After My Bankruptcy? – Julie

“Dear Lewis,

I filed Ch. 7 bankruptcy last year. I did not file on my 1st home mortgage or my 2nd mortgage – home equity loan and chose to continue paying them. I never signed any reaffirmation statements after the bankruptcy. Recently my loan officer pulled my credit and saw that my reports show I have zero balances on both my mortgage loans mentioned above. She thought it strange and said she’d never seen that before since I have still been paying on both loans. I checked my discharge papers and found that the 2nd mortgage-home equity loan was discharged under the unsecured debt section. I called my bankruptcy attorney who was no help in answering if I have to continue paying the home equity loan so I called a real estate attorney and he told me to call my bankruptcy attorney and check with the county records to see who are lien holders on the property. Both the first mortgage lender and MERS are listed. I found that MERS was handling the mortgage for the bank that I have the loan for the home equity loan. I still want to keep the home and pay the first mortgage but am trying to find out if I have to continue paying for the home equity loan without going into foreclosure.

How do I find out if I have to continue to pay a home equity loan that shows was discharged as an unsecured debt in my Ch. 7 bankruptcy discharge papers, without going into foreclosure?

Julie”

Dear Julie,

This is a common scenario after a chapter 7 bankruptcy.

It is quite common to not reaffirm mortgage debt. Many attorneys think it is malpractice to allow someone to reaffirm mortgages unless there was a very good modification involved.

So what happened is that you are in a retain and pay scenario. As long as you pay and stay current, the lender will not foreclose.

But at the same time, they do not have to report your payments on your credit. The proper reporting is $0 balance, discharged in bankruptcy.

There are still two valid liens, just no personal obligation to pay.

In the future, you can ask the lender for a payment history, or show canceled checks to a new lender.

I’m sorry that your bankruptcy attorney did not just tell you this information. You shouldn’t have been ignored just because your case is finished.

Do I Have to Pay My Second Mortgage Home Equity Loan After My Bankruptcy?   Julie My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

If you have a bankruptcy question you’d like to ask just use the online form.

Do I Have to Pay My Second Mortgage Home Equity Loan After My Bankruptcy? - Julie by

Share This and Spread the Word

About Lewis Roberts

Lewis Roberts
Florida Consumer Protection Attorney
  • Lewis Roberts

    Dear Alicia,I am sorry for the miscommunication you had with your bankruptcy attorney.  My advice is based upon the idea that you are now 100% certain that the second reaffirmation was not valid.

    You are no longer personally responsible to pay that mortgage.

    But you are not entitled to a refund of those payments.  You made a voluntary payment on the second mortgage.  Since you were making payments and staying current, that allowed you the right to stay in the home and not have the second mortgage foreclose.

    I never allow a client to reaffirm any mortgages in bankruptcy, even if they are keeping the home.  For the very reason that, later, they might decide to walk away, or need to walk away from the home.

    But also, as long as they stay current on the payments, the lender(s) cannot foreclose.  It is like renting your own home.

    So unfortunately, you are not entitled to a return of those payments.

    Why your attorney ever allowed you to sign a second mortgage reaffirmation is a different issue.

  • Alicia Lyn Marie Sfakianos

    My chpt 7 bankruptcy was discharged over 2 yrs ago.  Long story short, my attorney ended up reaffirming my second mtg but not my first one…I continued to pay on the 1st mtg and the 2nd because of the reaffirmation.  My credit report has shown the reaffirmed debt and reported pymts the past 2 yrs, until recently the 2nd mtg changed status from reaffirmed on my CBR to $0 balance/included in bkrptcy.  After contacting the creditor and court house, I found out the 2nd mtg was never properly reaffirmed like I and the creditor thought because it was never filed correctly so after 2+ years the creditor updated the status and advised me I was not responsible for the pymts if I choose not to pay any more.
    My question:  can I get refunded for the 2+ yrs I did pay under the assumption it had been reaffirmed?

    Thank You,
    Alicia

  • Alicia Lyn Marie Sfakianos

    My chpt 7 bankruptcy was discharged over 2 yrs ago.  Long story short, my attorney ended up reaffirming my second mtg but not my first one…I continued to pay on the 1st mtg and the 2nd because of the reaffirmation.  My credit report has shown the reaffirmed debt and reported pymts the past 2 yrs, until recently the 2nd mtg changed status from reaffirmed on my CBR to $0 balance/included in bkrptcy.  After contacting the creditor and court house, I found out the 2nd mtg was never properly reaffirmed like I and the creditor thought because it was never filed correctly so after 2+ years the creditor updated the status and advised me I was not responsible for the pymts if I choose not to pay any more.
    My question:  can I get refunded for the 2+ yrs I did pay under the assumption it had been reaffirmed?

    Thank You,
    Alicia

    • Lewis Roberts

      Dear Alicia,I am sorry for the miscommunication you had with your bankruptcy attorney.  My advice is based upon the idea that you are now 100% certain that the second reaffirmation was not valid.
      You are no longer personally responsible to pay that mortgage.
      But you are not entitled to a refund of those payments.  You made a voluntary payment on the second mortgage.  Since you were making payments and staying current, that allowed you the right to stay in the home and not have the second mortgage foreclose.
      I never allow a client to reaffirm any mortgages in bankruptcy, even if they are keeping the home.  For the very reason that, later, they might decide to walk away, or need to walk away from the home.
      But also, as long as they stay current on the payments, the lender(s) cannot foreclose.  It is like renting your own home.
      So unfortunately, you are not entitled to a return of those payments.
      Why your attorney ever allowed you to sign a second mortgage reaffirmation is a different issue.

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.

Close

I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.


  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.