Up 32. What does merged debts mean?
This applies only if you have a second, third, or more mortgages! If the lender holding your first mortgage forecloses then the second, third and so forth lenders no longer hold any right or title to your home. Although, you will probably still owe them money, they have no security interest in the home nor any right to foreclose on the home. However, if you buy your own home back at the foreclosure auction, the debt may “merge” back (reattach) to the property, as if the foreclosure never happened. Note: If you file chapter 7 bankruptcy prior to the foreclosure sale and receive a discharge (released from all debts) you will not owe any money and the lenders will no longer hold a security interest in your home.
