Q: Can a debt buyer foreclose on a discharged second mortgage in Hawaii?

A: If the debt, apparently a note, was actually discharged in BR, then there is nothing for the mortgage instrument to secure payment of and is void. Check out the BR carefully to make sure the debt was properly listed and discharged. The collection may be in violation of BR law. A possible quiet title action may lie to clear the title. Criminal Fraud may be possible also. Hire a competent HI attorney.

A: Yes, the debt buyer that properly owns the note can foreclose on the lien that was not extinguished in bankruptcy. The debt was, but not the lien. The only exception was that you filed a chapter 13 bankruptcy and avoided the lien in the chapter 13. Aloha, Blake Goodman (bankruptcy attorney)

A: When you received a bankruptcy discharge, it eliminated your personal liability to pay the second mortgage debt. However, this doesn't automatically remove the mortgage lien from your property. A mortgage loan has two separate components: the personal debt obligation (eliminated by bankruptcy) and the property lien (which typically survives bankruptcy).

This creates a challenging situation where a mortgage holder may still have the right to foreclose on the property even after your bankruptcy discharge. The mortgage lien generally remains intact unless it was specifically addressed and avoided during your bankruptcy proceedings. The debt buyer who purchased your second mortgage has acquired these lien rights, not your personal obligation to pay.

Hawaiian foreclosure law provides some protections you should explore. In a nonjudicial foreclosure, you have the right to reinstate your loan by paying past-due amounts plus fees up to three business days before any scheduled sale. Additionally, if the debt buyer proceeds with foreclosure, you may have the option to participate in Hawaii's mortgage foreclosure dispute resolution program to seek an alternative solution.

Given the five-year gap with no communication and the sudden demand from an attorney claiming ownership of the debt, I recommend consulting with a Hawaiian bankruptcy attorney immediately. There may be important questions about whether the debt buyer properly acquired the mortgage rights, the statute of limitations for foreclosure in Hawaii, and whether the buyer followed proper procedures for debt collection and notification.