Legal Question in Bankruptcy in Virginia

discharge of 2nd note on real estate

I hold a 2nd mortgage for 27k with 0 interest, due 2005. The home owner went thru bankruptcy court in 99 & reinstated the debt. Now he is threatning to do it again & try to discharge the debt unless I agree to allow another debt(car loan) get in second place & push me to 3rd. With equity in the house, can a 2nd note be discharged? Thank you for your time.


Asked on 9/26/00, 9:34 am

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: discharge of 2nd note on real estate

Personal liability can be discharged (so you may not be able to sue the borrower), but your lien would not be avoidable at all if it is supported by at least some equity at the time of the bankruptcy filing. In a Chapter 11 or 13, the borrower/debtor could reduce the lien amount to the value of the collateral (the equity in the property), and treat the portion above the equity as unsecured, but only if it is secured by property other than the borrower/debtor's principal residence. You should consult with an experienced bankruptcy lawyer regarding the specific details of your situation, as the particular facts of your case may result in a different outcome.

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Answered on 10/25/00, 10:18 am


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