Why Do We Still Have a Lien Against Our Home for a Second Mortgage Included in Bankruptcy? – Nichole


Dear Steve,

We filed bankruptcy in 2009. Never reaffirmed 1st or 2nd. We were under the false assumption that or second was eliminated by chapter 7. We have not heard from 2nd mortgage company in seven years and are trying to refinance. Can not do this because 2nd is still there. We now have equity in our home and want to settle with the 2nd but not sure if they will work with us. We can simply walk away but prefer to stay.

Why have they not contacted us in seven years? and will they be willing to work with us to do a cash settlement?



Dear Nichole,

This is a common misperception by people. If a second mortgage is eliminated in a consumer bankruptcy, it eliminates your requirement to repay the debt but it does not eliminate the lien. So if your obligation to repay the second mortgage was eliminated with the bankruptcy, there is no reason for them to contact you and they would be unable to contact you about the discharged debt.

If you thought the mortgages were reaffirmed does that mean you were paying both after your bankruptcy? It sounds like you did not make payments to the second so it was clearly not reaffirmed.

As far as settling the second mortgage, you should read this post by Charles Phelan, Why It Makes Sense to Consider Debt Settlement for Second Mortgages.

Would the lender be willing to accept a settlement for a debt you no longer owe? Maybe. But it seems it would make sense to contact Charles and discuss your specific situation with him and get some knowledgeable advice.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

Steve Rhode
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