bankruptcy, 80/20 loan on house 20% was accidently included in BK..Do I have to pay it back when I sell?

Question

I just sold house, on credit report states its 0 balance on 2nd loan 1st is great standings. Do I have to pay off second loan If it shows 0 balance and was included in BK?

Answer 1

Strange, the title says "when I sell" and the question "I just sold".

If you are in the process of selling your house, the closing attorney or title company would not allow the sell to go through without paying off the second mortgage.

If you have already sold your house, there is nothing to worry about because the debt was discharged in your bankruptcy. You may want to check your settlement statement just to see if the 2nd mortgage was paid.

More than likely, if the person who bought your property ever try to refinance or sell the house, they will have to file a lawsuit against the title company because they did not accurately research the title to see that there was a 2nd mortgage (lien) on the property.

Answer 2

Your question is really unclear, but I'm going to try to explain how this will work.

When you sell your house, the contract will be for "marketable title, free and clear of liens".

The Buyer will have a title search done. They will find the second mortgage, and the question is whether it is already released on the land records or not.

If it is released, you have no problem with it, but if it is not, you have to get a release from the lender, whether that takes the form of an order from the Bankruptcy Court or you have to pay the lender to get a release.

It sounds like the lender considers it paid, so it may be that it will be released on the records, or you can get a release from them by having your attorney ask for it.

Answer 3

If you filed BK chapter 7 and your credit report shows it as clear it is gone. there should be no lien on your title as you legally cleared that lien when you filed bankruptcy. You should not have to worry about that second loan at all.