Will bankruptcy wipe out my mortgage?

 A question I get once in a while is:  "Will bankruptcy discharge my mortgage?".

Here is what I tell people:  There are two levels to a mortgage.  The first level is a written promise to pay the mortgage company.  That written promise is called a promissory note.  The second level is a written document filed with the County Recorder that establishes a lien on the property listed in the mortgage.

A chapter 7 bankruptcy will release you from the promise to pay unless you sign a particular agreement to reaffirm the debt. That release is called a discharge. But bankruptcy will not release the real estate listed in the mortgage from the lien of the mortgage. 

Like most things in law there are a few exceptions to the general rule.  One exception is that if the mortgage is a second mortgage, and if the balance of the first mortgage is more than the value of the house the second mortgage may be "stripped off" in a chapter 13 bankruptcy.

If you have questions about this, feel free to call my office at 320-252-4473.