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Does applying for modifiction of a mortgage discharged in bankruptcy create an obligation on the discharged mortgage?

San Francisco, CA |

My first purchase loan of $680K and second purchase loan of $125K with BofA in California were discharged in Chapter 7 bankruptcy. The bank has offered modification of the mortgages to avoid foreclosure, but is not offering principal reduction although the value has decreased from $850k to $680K. I don't see the sense in a modification without reduction of principal but am interested to know if applying for a modification would restore an obligation on the discharged loans.

Attorney Answers 3


You need to retain experienced bankruptcy counsel right away. The point, and the final result, of a chapter 7 bankruptcy in which you surrender the property is that the property is, well, surrendered. Your obligation on the mortgage(s) is discharged. So, the modification is senseless.

This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.

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If you did not reaffirm the debt and filed a chapter 7 and got a discharge the banks are probably violating the discharge injunction by trying to refinance the mortgage. Most financial institutions refuse to refinance under the circumstances I stated. Talk to your bankruptcy attorney about this situation.

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Once you were discharged, the possibility of reaffirming the mortgage ended. No loan modification can resurrect the personal obligation on the mortgage. Most loan modifications are either not granted or they fail. Good Luck.

[This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]

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