Legal Question in Bankruptcy in Pennsylvania

Very complicated problem but here it goes! Had a business loan for $1.6 million they made us pledge our property in order to get this SBA loan thus placing a Lien on our deed/property. The business did not survive we went bankrupt filing and closing a chapter in 2011. I continued make all the payments on the house no problem so I went to my mortgage company that is a Credit Union and the not only refinaced my home but they also gave me a home equity loan in 2014. I went to refinance a few weeks ago everything was approved and we were waiting to close when they said we just need you to get the liens on the record cleared. I said they should be cleared from the Avoidence of Lien we did? So I contact the Prothonotarys office and they said the clear the Judgements but we have nothing to with the mortgage lien that is on our deed. So... after many phone call to my bankruptcy atty and the deed office it became clear that a mortgage lien and a judgement lien were done for the same loans for the same amount the judgement was cleared but not the deed. It gets better my Credit Union that used to hold my mortgage in 1st place placed themselves in 5th and 6th place on the deed! This leaves me with no leverage to try to negotiate the lien off the deed and opens me to foreclosure from the bank that moved up into 1st place! If I knew that the avoidence did not take care of the deed and I would never see a dime out of this house I would have walked away because my house is only worth about $425,000 and the lien right now are over $2 million. I dont know what to do? Do I continue to make mortgage payments to my credit Union? If I don't can the come after me? Since I make no payment to the bank who hold the 1st positiion and I stop making payments who would forecolse if anybody?? Did the Credit Union leave themselves no ability to foreclose? We am completely devistated and can't beleive this is happening!

Asked on 11/05/15, 9:45 am

1 Answer from Attorneys

Matthew Nahrgang Nahrgang & Associates, P.C.

The only part of your situation that is confusing to me is how and why your Credit Union refinanced you when there was an existing mortgage lien. Mortgages are only dischargeable in bankruptcy if a lawsuit is filed for what is known as a cram down. That is possible in cases where the debt is secured by more than the mortgage, as is possible in a business scenario. In that event, the debtor seeks to cram down the lien to the value of the property. I gather that was not done.

When a borrower either buys a property or refinances, there is title insurance for the transaction. If the insurance covers this situation, you may have a claim against the title company.

I think you might benefit from speaking with me in real time to flush out the facts and advise you how it all could have and should have worked.

Read more
Answered on 11/05/15, 11:02 am

Related Questions & Answers

More Bankruptcy Law questions and answers in Pennsylvania