Phenix City, AL asked in Bankruptcy for Georgia

Q: Can a chapter 13 wipe out a mortgage if no claim is filed?

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1 Lawyer Answer
Jonathan C. Ginsberg
Jonathan C. Ginsberg
Answered
  • Atlanta, GA
  • Licensed in Georgia

A: The secured creditor's failure to file a proof of claim does not eliminate the lien filed in your state clerk's records. If the secured lender does not file a proof of claim it will not participate in the Chapter 13 distributions but its lien and right to collect remain and will survive the bankruptcy.

Since many Chapter 13 cases are filed to cure mortgage arrearages, it defeats the purpose of the plan for a mortgage creditor not to participate in the Ch. 13. That's why, in many districts, the debtors' attorney is required to examine the claims file and report to the court (or file a substitute claim) if the creditor does not file a proof of claim.

Also, in many districts, the trustee will accept a late filed claim.

Bottom line: your mortgage isn't going to go away and you don't get your house for free.

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