Mortgage Lien Removal & Chapter 7 Bankruptcy

Asked over 3 years ago - Houston, TX

Is it possible to have a mortgage lien removed if the debtor files an adversary proceeding, and successfully argues it, in a chapter 7 bankruptcy?

Attorney answers (4)

  1. Kelly Donovan Jones

    Pro

    Contributor Level 10

    Answered . I must agree with the two attorneys above on the fact that a "consensual" mortgage lien on your home can't be avoided in a Chapter 7. However, if your issue regarding your lien (which you say you would "successfully argue" in court) is based upon some other defense, it may be possible to make this argument in a separate state court action pursuant to the laws of your state (Texas).

    Of course this depends on exactly what the argument is that you are trying to make. In the midst of all o the recent foreclosure crisis that has swept across the country, and the subsequent behaviors of many of the banks and their subsidiaries, there are plenty of old and new theories that are being used to challenge mortgage notes and securitized interests. Thus, if you think you may have a valid defense (or reason for rescission/cancellation) for the loan/not then you should contact an experienced attorney that is licensed to practice in your area. It may at least be worth a consultation to see what your options are.

    I hope this was helpful.

    Good luck!

  2. Dorothy G Bunce

    Pro

    Contributor Level 20

    Answered . It usually isn't possible to remove a mortgage lien in a Chapter 7 because Congress did not give the Bankruptcy Court the authority to do this. If you are considering lienstripping of a 2nd mortgage, that is usually only possible in a Chapter 13.

    However, if you wish to gamble, the courts are open to everyone.

    Good luck!

  3. Theodore Lyons Araujo

    Pro

    Contributor Level 20

    Answered . No. You cannot remove the mortgage lien in a chapter 7. You can remove judgments if you take the homestead exemption but the second mortgage can only be removed in a 13.

    REQUEST: Please give this answer a "thumbs up"(below) if you find it valuable.

    Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship. The opinions expressed herein are those of the author only and the fact that he has worked as an Assistant District Attorney; State Supreme Court Clerk; Special Assistant United States Attorney (Hawaii); Assistant Cornell University Counsel or Judge Advocate, United States Marine Corps should not be relied upon to assume that these statements reflect the policy of these organizations.

  4. Robert Parkinson Taylor

    Pro

    Contributor Level 13

    Answered . A New York court (I believe) recently allowed a 2nd to be stripped in a Chapter 7. So far, I do not believe any other courts have followed. That said, you may be able to strip the lien in a Chapter 13. Depending on your income, expenses, assets and local court rules, who knows, you might be able to get out of your second paying close to nothing. I can't assess your situation without knowing more and I'm not knowledgeable about your local practice. However, I strongly suggest you consult with a local attorney, one that does Chapter 13's regularly. You should also ask him or her how many "lien strips" they have done.

    Good luck to you!

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