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How does a bankruptcy affect a second mortgage or equity loan?

Our Professional Answer:

When you file bankruptcy, you must list every debt you have a legal obligation to pay, this includes a second mortgage or a home equity loan. When you receive your discharge of bankruptcy, those loans are discharged equally with every other debt. The unique thing about a second mortgage or a home equity loan is the loan itself which was typically secured by your house may no longer be secured by the house. You must ask your bankruptcy lawyer to review this issue and see if you can strip the home equity or the second mortgage off your home prior to receiving your discharge.