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Filing: chapter 13 bankruptcy; found that papers were not properly filed, and is an unsecured mortgage.

Goodland, MN |

We are scheduled for court for or chapter 13 bankruptcy case for the 18th and all letters to the trustee are done. But there is the issue of the house. Our law firm said that it is the issue of the trustee. Bankruptcy is supposed to include "all" debt and all "unsecured" debt is to be part of the payment plan. I was told another bank will buy the loan, but why would they if there is not house for collateral. I guess I don't get the difference if it's classified the same other than its really bad for the bank.

Attorney Answers 2


  1. When I had a client whose mortgage lender failed to properly file its mortgage, I proposed that the home be sold to satisfy the creditors, while claiming the homestead exemption for the debtors. It ended up being a 100% payment plan as the mortgage lender did not file a proof of claim, and my clients got about $30k when all was said and done.


  2. It sounds as though you listed the debt in your bankruptcy case, but due to an error on the part of the original creditor (bank) that the debt is now an "unsecured debt" rather than a "secured debt". Though a Chapter 13 will discharge the unsecured debt, it is possible that your plan proposes to pay some percentage to the unsecured creditors. If due to the banks error the home is now "free and clear" that may significantly increase the amount that would need to be distributed to your unsecured creditors in the Chapter 13 plan.

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