Legal Question in Bankruptcy in California

chapter 13 second mortgage lein

We filed chapter 13 in 2000 the full balance of our second mortgage was placed into the bankruptcy. The company that held the lien also filed and sold out to another mortgage company. Neither company submitted a cliam to the trustees office. Per the instructions of our attorney we continued to make monthly payments on the loan until the new company contacted us and advised us not to. About 2 years later we received a letter stating they had processed the payoff on the loan and that they would forward the documents to have it removed from public record. Throughout this time frame company B was not cashing the checks sent them by the trustees office, They did eventually cash them when pressed to do so by the trustees office with the exception of the final payment which they refused to cash and was subsequently sent to the bankruptcy court. The bankruptcy has been discharged for over a year now. We are selling the home and have found that a third company is stating that they hold the line and that it is due and payable. We have never received anything telling us the lien was sold to them nor have they contacted us in anyway. a $32,000 loan is now $53000 with the interest. Do we owe this money?


Asked on 12/12/05, 7:57 am

1 Answer from Attorneys
JOHN GUERRINI THE GUERRINI LAW FIRM - COLLECTION LAWYERS

Re: chapter 13 second mortgage lein

Probably not, if you can easily prove that you have paid it in full. Mortgages are bought and sold all the time, and this might be a case of lack of communication between the apparent seller/buyer of your second.

Do you have anything from the BK court, as part of your discharge, showing that the debt is paid? That would be helpful.

If not, contact the holder of the note directly and explain what has happened and offer proof that the balance has been paid. If they refuse to budge, you can offer to close your home sale and leave sufficient proceeds in escrow pending resolution of the dispute. If this is not practicable or if they still refuse to budge, then you probably have a good lawsuit against them for slander of title, interference with contract, and breach of contract, among other possible statutory claims.

You should consult with an attorney familiar with real property transfers and litigation arising therefrom. We are real property litigators and if/when you find the need to retain counsel, please feel free to call or email us.

Good luck.

Read more
Answered on 12/12/05, 11:33 am


Related Questions & Answers

More Bankruptcy Law questions and answers in California