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Secured debts normally survive bankruptcy.

 

A mortgage or trust deed has two components: 


(1) A promise by you to pay the loan; and 

(2) A security provision (lien) that enables the lender to foreclose if you fail to meet your payment obligations under the loan.  [See  Secured  Debt  Defined].

 

The bankruptcy discharge: 

..

(1) Eliminates and wipes out  your personal liability for the mortgage; but 

(2) Does not eliminate the security interest (lien).  

...

Therefore, after a bankruptcy discharge, the mortgage lender still has its rights in the property, including the right to foreclose if you breach the loan agreement by failing to meet your payment obligations.  

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Note: Certain types of liens (for example, judgment liens) can, in certain cases, be eliminated through bankruptcy.  Further, in certain limited circumstances, a HELOC or second trust deed can be eliminated at the end of the successfully completed Chapter 13 payment plan.

For a free and confidential consultation, contact southern California bankruptcy lawyer Matthew B. Tozer.

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