After I filed chapter 7 in 1997, the company holding my second mortgage cancelled the debt. I received the 1099 and the IRS confimed that they wrote it off. They did not release the lien and now a collection company is threatening me for a debt that I thought was cancelled. Is this legal? Why did they cancel the debt if they still intended to collect? I had the second mortgage for 9 years and paid more than I borrowed but the amount written off is almost the same amount I borrowed. Someone suggested that they simply forgot to release the mortgage and that I have no further obligation. Is this true? I really need to refinance to pay for repairs as the house is crumbling but I can't afford to pay off 2 mortgages. It was through this inquiry that I found out the lien was still on the house. It looks like I stirred up something. Can you help?