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I got a notice that my home equity lien has been released -- The balance is/was 60k?

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    I got a notice that my home equity lien has been released -- The balance is/was 60k?

    I finished my Ch13 in May 2019. It has been discharged.

    During my bankruptcy I was paying my regular Mortgage to the mortgage company. I was also making payments on my home equity loan (through Chase) to The Five Lakes Agency. Five Lakes was handling bankruptcy accounts for Chase.

    About a year before my bankruptcy had finished Five Lakes stopped answering the phone and their website no longer existed. I had been making payments over the phone every month and when they stopped answering I stopped paying, expecting something would be sent to my attorney to indicate where I needed to make payments now that Five Lakes no longer exists. That never happened.

    At the end of the bankruptcy we went through all the required steps (I could look up all the form names and numbers but I don't remember them off hand) we signed that last paper to get the discharge and waited for the two lien holders to submit their declaration that we were up to date on payments, or not, and what the remaining balance was. Neither Chase or Five Lake responded and so the discharge moved forward without that.

    There was still an outstanding balance on the home equity loan of about 60k. I figured Chase would just hold onto that until we sold or refinanced and then get their money. But today I got a letter from chase that pretty simply just said "We're releasing your lien."

    From everything I can tell that means they will no longer have any claim on my house as collateral for the 60K balance and I'm off the hook for that money?

    Am I correct? Or is there going to be some other consequence I should expect?

    Thanks!

    #2
    Did Chase actually filed a notarized release of the HELOC / 2nd mortgage lien with your county recorders office? If it's a yes, then you are off the hook. The notarized lien release filed with the county is more important and solid than a letter saying Chase will release the lien.

    I have heard of cases where the HELOC / 2nd mortgage was stripped during a successful ch 13, and owner has not paid the 2nd mortgage in years, but 2nd mortgage lender did not file a lien release. Complications will arise if one tries to sell or refinance the first mortgage coz of the recorded lien, which must absolutely be removed first.

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      #3
      Originally posted by underh20 View Post
      Did Chase actually filed a notarized release of the HELOC / 2nd mortgage lien with your county recorders office? If it's a yes, then you are off the hook. The notarized lien release filed with the county is more important and solid than a letter saying Chase will release the lien.

      I have heard of cases where the HELOC / 2nd mortgage was stripped during a successful ch 13, and owner has not paid the 2nd mortgage in years, but 2nd mortgage lender did not file a lien release. Complications will arise if one tries to sell or refinance the first mortgage coz of the recorded lien, which must absolutely be removed first.
      The HELOC was not stripped when I entered CH13, we tried but were unsuccessful.

      I don't think they've released the lien yet, the letter I got really just said "We're releasing your lien" then listed the account number and property address, then said in the body of the letter, "We're going to release the lien we hold on your property. If you have any questions, please call us at..."

      So I think this is a notice that they are going to release it but that it hasn't happened yet. I don't know if I need to call them or just let them do it. One thing I'm concerned about is if the amount still owed will count as income and completely mess up my taxes.

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        #4
        Debts discharged thru bk is not taxable. For example, I never received any IRS form 1099 C for several bk discharged debts, including the 2nd mortgage that got striped at the end of my bk.

        If you receive a 1099 C at the end of the year, generally the discharge debt is taxable. But if the discharge debt qualifies for an exception from your gross income, then the cancelled debt not taxable. The IRS website listed several exemptions for taxation of cancelled or forgiven debts.

        Comment


          #5
          Originally posted by underh20 View Post
          Debts discharged thru bk is not taxable. For example, I never received any IRS form 1099 C for several bk discharged debts, including the 2nd mortgage that got striped at the end of my bk.

          If you receive a 1099 C at the end of the year, generally the discharge debt is taxable. But if the discharge debt qualifies for an exception from your gross income, then the cancelled debt not taxable. The IRS website listed several exemptions for taxation of cancelled or forgiven debts.
          The debt wasn't discharged through my bankruptcy. That's what is confusing about this. I don't think they have any obligation to forgive the debt, unless by not responding to the notice of final cure payment they lost their claim to the balance?

          That's all I can figure.

          Unless they have to pay taxes on the lien as an asset and they decided they wouldn't collect in time for it to be worth it?

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