Q: I filed chapter 7 four years ago and included my mortgage. I continue to pay. Can a new lien be placed on my house?
Technically, I could walk from this mortgage as I am legally free from paying it but I plan to finish it. Can another creditor I'm having trouble with and was not included in the original chapter 7 bankruptcy place a lien against me on this home I have no legal obligation to pay? If yes, what if I just walked away from the home? How would the mortgage company deal with it? I don't see how a lien can be placed on a home and mortgage released in chapter 7 but that's why I'm asking. I've never seen this question asked or answered anywhere online. Thank you.
Justice Clarence Thomas, in the Dewsnup opinion, wrote for the majority that in a Chapter 7 case, a validly perfected mortgage lien against property cannot be "stripped down", i.e., is not affected by the bankruptcy filing (the opinion strangely held that section 106 of the bankruptcy code simply did not apply).
Your bankruptcy discharge did relieve you of the legal obligation to pay any unsecured deficiency there may be in your mortgage debt. If you "walk away", the holder of the mortgage retains the right to foreclose and sell the property with the proceeds of sale applied to outstanding taxes, the sheriff's costs of sale (poundage), and the balance of the mortgage(s). In other words, while your personal liability for the deficiency may have been discharged, your property remains liable for payment of the mortgage debt.
If "another creditor" takes a judgment against you, it will constitute a lien against your property to the extent of your interest in that property (unless you hold as tenants by entirety under PA law). If you do not arrange for voluntary payment of that creditor's claim, it can proceed to foreclose against your property, and you will continue to be personally liable for any deficiency remaining on the judgment lien.
Timothy Denison agrees with this answer
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.