Bankruptcy can help a debtor eliminate his obligation to pay his debts. When a second mortgage is discharged through bankruptcy, a debtor is no longer required by law to repay the outstanding balance. Creditors are not allowed to pursue debtors to collect any longer for debts that are discharged. Bankruptcy is usually used as a last resort by people faced with too much debt. The rules that govern bankruptcy depend on what kind of bankruptcy is filed.

A chapter 7 discharge is obtained through filing a Chapter 7 bankruptcy. Once the discharge is approved, the debtor no longer has the obligation to pay for the discharged debts, however, not all debts can necessarily be discharged. Creditors are ordered not to collect debts from debtors whose debts have been discharged and harassing collection calls should cease. However, not all debts and individuals are eligible to file a Chapter 7 bankruptcy.

As of now, you cannot use chapter 7 to get rid of your second mortgage. But, you can get a discharge from unsecured second mortgages in chapter 13. First of all, creditors do not like the idea of dealing with foreclosures. Most of the time, lenders can provide you with help to avoid your home from getting foreclosed.

Some debts can be discharged, while some cannot. Understand that debts that are secured by property cannot usually be discharged. However, when you owe more than the value of your home, the lien can be discharged since the creditor has nothing more to claim.

Before filing for bankruptcy, make sure to research on the type of bankruptcy you plan to file. The discharge procedures that will apply will depend on the type of bankruptcy. There are certain factors that may prevent you from getting a successful discharge such as willful and malicious damage to property.

The best way to get answers is to ask a bankruptcy lawyer for options. Before you decide to file bankruptcy under Chapter 7 or Chapter 13, you need to know whether you are eligible or not. Professional help can ensure that you get the best options available.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.