prepayment penalty

filed chapter 7 in PA., it was discharged, included mortgage but I am still paying it off. want to refinance for lower interest rate but prepayment mortgage clause will cost me $9500, am I still subject to mortgage clauses?

Yes.

I have 11 months more of payments to get past the penalty date. the clause states in part - you agree to pay a prepayment penalty eqqual to not more than 6 months advanc daily interest on the unpaid balance as of the pay off date. So if I pay all but the 11 payments first and then after a month pay off the rest will I only be liable for a penalty for the interest of the 10 months pay off? Could my new mortgage company do something like that?

Your new mortage company isn't going to get involved with that. They will want first position on the property when they write the mortgage. If there's still an unpaid mortage balance from the previous lender, the new lender won't be first in line on the property.

In other words, you'll need to completely pay off the current mortage with the refinance. If you don't, you can't refinance.

I've seen situations like yours in the past. Simetimes, you can write to the current lender and make an offer to split the difference. Tell them that you need to pay off the current mortage due to a hardship, and that you'd like to make an offer of 1/2 the prepayment penalty. Sometimes (but not offen) they accept.

If not, your only option is to pay off the penalty yourself, or see if the new lender will roll it into the new mortage.