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Scura, Wigfield, Heyer, Stevens & Cammarota Blog

A Chapter 7 Bankruptcy Wipes Out All Mortgage Loans

[fa icon="clock-o"] July 24, 2012 [fa icon="user"] John J. Scura III [fa icon="folder-open'] Bankruptcy, Chapter 7

chapter-7-bankruptcy-and-mortage-loanMany of our clients are seeking to get out of both credit card debt and mortgage debt on a home through a Chapter 7 bankruptcy.   I have been surprised lately that some clients think that they are still responsible for mortgage debt after the Chapter 7.  While the mortgage is still a lien on real estate that you own, you wipe out any personal responsibility to pay that loan through the Chapter 7 bankruptcy discharge.  Thus, after the chapter 7 is done you do not need a short sale or any further action to get out of the mortgage debt. 

Usually You Still Have Time In the House After a Chapter 7 Bankruptcy

You will still even get time in the house after the Chapter 7 typically - depending upon how far along the bank is in the foreclosure process.  The bank still has to foreclose after the Chapter 7 is concluded.   I also try to explain to clients that the foreclosure is only the bank going after its lien on the house and taking back its collateral - the real estate.  The bank cannot collect money from you through the foreclosure and, if you went through the Chapter 7 bankruptcy successfully, there is nothing the bank can ever do to you personally to collect any further monies.    

Contact our Chapter 7 Bankruptcy Attorneys in New Jersey for a Free Bankruptcy Consultation today. 

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