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My lender didn't file a security deed on my home and I filed a chapter 7 against negative equity, can I keep the house?

Atlanta, GA |

My real estate was valued at 110,000 and dropped to 35,000 I filed a chapter 7 and included it and the loan was discharged, but the lender wanted to forclose instead of just putting the negative equity into the bankruptcy.They never got approval to service the loan and never register a security deed with fulton county and have made contact with me since the discharge in attempt to collect the debt, their very own attorney stated they made a "innocent error"by not filing the proper paper work, so with no deed in their name and the debt discharged can I keep the home, the chapter 7 gives a 42,500 exemption and the home is at 35,000. Not to mention I have the Warranty Deed, am I free and clear of this debt? I have paid more the 125,000 since I have been here and done improvements.

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Attorney answers 4


Exemptions won't prevent a foreclosure (it may have prevented the Ch. 7 Trustee from selling), and the fact that the deed was not recorded (not "filed") does not mean that the lender does not have a valid security interest and can't foreclose. Recording is to give notice to the world of the security interest - you already have notice. The lender can record the deed any time. Aside from that general information, no one here has the documents or knows what was recorded, and when. To get firm answers about the status of your property, you need to take all the documents to a lawyer, and a title search will need to be conducted.


I agree with Mr. Riddle that you need to consult with an attorney. The lender may have violated the Fair Debt Collection Practices Act and be in contempt of the discharge order if it tried to collect the discharged debt as well as. You need to consult with an attorney who is experienced in bankruptcy and consumer matters.

The answer given is for informational purposes only and does not constitute legal advice. Dwight Bowen is a bankruptcy and consumer attorney and may be contacted at (404) 880-3310.


It seems that you misunderstand what the chapter 7 bankruptcy can accomplish. It does not reduce the balance owed on a mortgage to the value of the property. It temporarily stalls but not eliminate the right of a mortgage holder to go after the property in the event of non payment of mortgage. To prevent foreclosure when borrower is behind on mortgage payments the remedies are (1) loan modification - which may or may not work (2) chapter 13 bankrutpcy in which provided that the debtor has sufficient disposable income he/she is allowed to catch up on past due payments. The exemption is a concern if a debtor owns real estate property and has either no loan or owes less on the mortgage then the property is worth. You are not in that situation since you owe more than the value of the home. I highly recommend consulting with an attorney to see if continuing with the chapter 7 makes sense, what it will accomplish for you, and perhaps discuss other alternatives such as chapter 13.

I am not YOUR lawyer. You should not rely on answers to questions as legal advice. For legal advice you should contact a law firm for a consultation. Tokarska Law Center 185 West F Street #100, San Diego, CA 92101 (619) 285-1992 Tokarska Law Center is a Federal Debt Relief Agency representing individuals and businesses in filing for bankrutpcy protection under the U.S. Bankrutpcy Code.


Pay for a title report to get a professional opinion of what liens, if any, exist against the title.

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