Can You Get Rid Of A Mortgage: An Update
By L. Jed Berliner, Western & Central Massachusetts Bankruptcy Attorney on May 30, 2009 in Bankruptcy Cases & Legislation, Chapter 13 Bankruptcy, Life After Bankruptcy
A Massachusetts Chapter 13 debtor has been able to remove (”cancel” or “rescind”) a second or refinancing mortgage, without having to pay the full principal balance, if there was a serious defect in the closing papers. See Cancel That Mortgage: Why Bankruptcy and Remove That Mortgage !!
A recent intermediary appellate decision just changed that ruling. The U.S. District Court decided that the principal balance had to be paid up to the debtor’s abilities, and sent the case back to the bankruptcy court.
Interestingly enough, the ultimate effect may not meaninfully change the previous decisions. It is likely that “the debtor’s ability to repay” will be limited to the maximum five year duration of any Chapter 13 plan. lso, since bankruptcy courts are “units” of the district court, this new decision does not necessarily bind any other bankruptcy judge in the state.
I’ll keep you advised.
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