Challenging the Validity of a Mortgage Loan in Bankruptcy: A Simplified Guide

When people talk about bankruptcy, they often feel overwhelmed and confused by the legal jargon. But it’s crucial to understand these laws, especially if you’re trying to protect your home. One way to do this is by filing what’s known as an “adversarial action.”

An adversarial action in bankruptcy is like a separate lawsuit within the bankruptcy case. In simple terms, it’s a way for you to fight back against a creditor, such as the bank holding your mortgage, by arguing that the debt should not be treated the way they say it should.

The Problem with some Mortgage Loans

Sometimes, banks and other lenders don’t follow the rules when they give out a mortgage. They might mix up the paperwork, or they might not have the right to collect the money they say you owe them.

In legal terms, this can mean that the mortgage is “unsecured.” When a debt is unsecured, it doesn’t have a specific piece of property (like your house) tied to it. That means if you don’t pay it, the creditor can’t automatically take that property from you.

Adversarial Actions: A Possible Solution

If you believe that your mortgage is unsecured, you can use an adversarial action to challenge it. Here’s a simple breakdown of how that works:

1. **Filing the Action**: You or your lawyer will prepare legal documents that explain why you believe the mortgage is unsecured and why it should not be treated as valid. This can include evidence of mistakes or misconduct by the lender. Here at livinglies we assist in preparing documentation to be used in court filings for adversarial actions.
2. **Serving the Action**: These documents must be given to the lender and anyone else involved. This is called “serving” the action.
3. **Response from the Lender**: The lender will have a chance to respond, and they may try to prove that the mortgage is valid and secured.
4. **Going to Court**: If you and the lender can’t agree, a judge will hear the case. You’ll have to present your evidence, and the judge will decide who’s right.
5. **Outcome**: If you win, the judge may decide that the mortgage is unsecured and can be treated differently in your bankruptcy. This might make it easier to keep your home or to deal with the debt in a way that works for you.

Conclusion

Challenging a mortgage through an adversarial action isn’t easy, but it’s a powerful tool if you believe your lender has treated you unfairly. It’s vital to have a good support team and a bankruptcy lawyer who understands these issues and can guide you through the process.

Remember, every case is different, so this guide is only a starting point. Talk to a professional about your unique situation. Don’t be afraid to ask questions and make sure you understand what’s happening. After all, this is your home, and you have the right to fight for it.

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