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Foreclosure After Bankruptcy- Do I Have to Pay the Mortgage Company?

Foreclosure and Bankruptcy

If you have a home with a mortgage payment that you kept through your Chapter 7 or Chapter 13 bankruptcy you have probably wondered about:

What will happen in the future if I cant make my mortgage payment?

Will the mortgage company be able to come after me if I cant pay my mortgage?

Does the bankruptcy protect me from having to repay the mortgage company if my house goes into foreclosure?

Many times you made a decision to keep the house through the bankruptcy in the hopes that the mortgage company would be wiling to modify your loan or work out an option with you that would make your payments more affordable. If this does not become a reality or a loss of a job or income makes your home unaffordable what are your options?

If you have filed for Chapter 7 or Chapter 13 bankruptcy and you have obtained a discharge then you may not be responsible for any deficiency on your home if the house goes into foreclosure. If you did not sign a reaffirmation agreement for your mortgage then the lender is limited to foreclosing against the house and cannot seek to collect any deficiency against you. A reaffirmation agreement is an agreement that makes you personally liable for repaying the mortgage even after bankruptcy. It is generally not advisable to sign a reaffirmation agreement for a home mortgage as part of your Chapter 7 bankruptcy.

If you find yourself in a situation where you cannot afford to repay your mortgage after the completion of your bankruptcy case then the mortgage company has the right to foreclose on your home, but they do not have a right to collect the remaining balance from you. Your bankruptcy discharge has eliminated your personal liability for the home mortgages or line of credit on your home.

What if I Refinance?

If you refinance your home after a bankruptcy discharge, then whether you could be held personally liable for the mortgage will depend on state law. This loan would be considered a new loan and one incurred after bankruptcy and would not be part of your bankruptcy discharge. Depending on your state law, the refinancing of your home could give the mortgage company the ability to sue you for any difference between what you owe on the house and what the house was sold for.

What if I Obtain a Loan Modification After Bankruptcy?

This is an area that I believe is not clear cut yet. Some mortgage companies appear to be trying to protect themselves by putting in language to make you personally liable after obtaining a loan modification. Whether this will stand in court remains to be seen. The key question appears to be whether a loan modification creates a new loan and therefore a new liability after bankruptcy. At this point I would argue that it does not create a new loan but modifies the terms of the existing loan and therefore does not create a new liability. There are other attorneys who appear to hold that it does create a new loan and therefore creates personal liability after bankruptcy. From their viewpoint a foreclosure after a loan modification could result in the mortgage company coming after you for any deficiency (again this would depend on state law)

Comments

Nelson, I would recommend that you continue to pay the insurance on the property in case someone is injured on your property. As long as you remain on the title to the property there is potential liability for any injury that results from the property. Generally when the lender forecloses on your property they take care of paying off any outstanding taxes on the property.
Hi Norma, I received the dicharge on Chapter 7 in August 2012(Florida). I did not reaffirm the mortgage. I have no choice but to wait for foreclosure or sale process.
if I'm still as property owner, Do I have to keep paying the taxes and insurance?
Thank you in advance.
Hi Norma, thanks for your response to my previous question. I am getting ready to file Ch. 7 soon. My cousin & I are co-owners of our house that is underwater & decided to let go in whatever means possible. Her Ch. 7 was discharged in Dec. 2011 she did not re-affirm the house but we kept it. Due to reduced income we cannot afford our mortgage anymore and stopped paying for several months now hoping to do short sale or foreclosure which did not happen. I am surrendering the house thru Ch. 7 soon, would my cousin be left responsible for our loan after my Ch. 7 has been discharged? We only have one loan. Did she get a discharge on her portion of our loan even though she did not surrender our house at that time of her BK? Your advice will be greatly appreciated.
Jennifer, If you continue to pay your 1st mortgage it will not make you personally liable for your 2nd and 3rd mortgage. If you do not reaffirm the mortgages in your bankruptcy then your personal liability will be eliminated in your bankruptcy. Keep in mind that this does not remove the mortgage liens that the 1st, 2nd, and 3rd mortgage have on your home. It simply means that the mortgage companies cannot come after you personally for the debt, but they can still foreclose on the home if you are in default. If you are planning to keep your home in the long term then eventually you will want to negotiate a settlement or payment plan with your 2nd and 3rd mortgage. Also you should check with your local attorney as there are some courts that are now allowing you to strip completely unsecured 2nd and 3rd mortgages in a Chapter 7 bankruptcy. This is a recent development and judges in your area may not agree or follow this position.
Ginny, If the mortgage debt is discharged in a bankruptcy then there is no tax liability for the debt. Whether you will have tax liability if you file later will really depend on a number of factors. If you lose your home as a result of a foreclosure before filing bankruptcy and you have no liability for any deficiency because the loan was a purchase money loan, then the mortgage company will treat it as cancelled debt. They will generally send you a 1099 for the cancelled debt. Whether you will have to pay taxes as a result of the cancelled debt will depend on whether it meets the requirements of the Mortgage Forgiveness and Debt Relief Act of 2007. Under the act certain cancelled debts will not be treated as income to you and there will be no tax liability as a result.
Sandy, your boyfriends credit could be damaged if he is on the loan, and the mortgage is in default. If the debt was included on the ex-wife's bankruptcy and discharged then the creditor should not be reporting any late payments on her credit report but this will still be reported for your boyfriend.
If you obtained a discharge of the debt in your bankruptcy and did not reaffirm the mortgage then no negative information regarding late payments should be listed in your credit reports. I would dispute the information on the credit report and contact the mortgage company to request that no further information be reported. If they continue to report the information then I would consider examining whether you can reopen your case and seek sanctions against the creditor. As to the foreclosure, unfortunately it is very common for mortgage companies to report a foreclosure on your credit report even if the debt has been discharged in bankruptcy.
Hi Norma, I live in California and I am getting ready to file for Chapter 7 to include my home that i would like to surrender, would i have tax liability after it has been discharged? If not, can I file it anytime say early 2013 and would not have tax liability? Thank you. Ginny
Hello Norma,
First, this is just great site to read and get informed on different situations people are facing, unfortunately. Thank you for even taking the time. My situation is as follows:
I filed chapter 13 earlier this year(Feb 2012). At the time, I did not qualify for a chapter 7 due to the salary that I was making. Before filing, I advised my lawyer that my salary would change because I knew I will be getting laid off later in the year. I also filed for bankruptcy because I wanted to get rid off my 2nd and 3rd mortgage of my home. Fast forward to now, I did find a decent job but as expected, it pays less and so I converted to a chapter on Aug 31st. I also had plans of just walking away from my home since I am so underwater- roughly $160K. Since filing chapter 7, I have a change of heart about leaving my house. I honestly don't want to uproot my kids and start over in a new town. My lawyer said that I don't need to reaffirm and if I want to keep my home, I just have to pay the mortgage and if I want to negotiate the loan, I could. My issue is with the 2nd and 3rd mortgage. Would keeping and paying my 1st mortgage still make me liable for the 2nd and 3rd mortgage? This is what I am afraid of because I can't afford those and the house is really underwater. Do you have any advise for me. Thank you so much. I really need another lawyers input since I now can't get in touch with mine.
Unfortunately the only thing I can tell you is that any arrears that you owed for the mortgage were not erased by filing for bankruptcy. If you intend to keep the house you have to still work out an arrangement to repay the arrears or get a loan modification that handles the arrears. I am sorry about your situation and what you have been through, but unfortunately the bankruptcy does not take care of the arrears that are owed on the house.
First I would check if the house has actually been foreclosed on since most trustees in bankruptcy court do not get involved with actually foreclosing on the home. The mortgage company will generally begin the foreclosure process if they are informed that the house is being surrendered. Keep in mind that some mortgage companies may still take months to years to foreclose on the home, even after you have informed them at you are surrendering the home. You may be receiving these notices because she is still the legal owners of the home. I would check with the county recorder and the mortgage company to determine if she is still on title.
I can only answer this based on California law. If you are in California, the second mortgage would have a right to foreclose on your home if you are in default. Generally mortgage companies provide for the right to foreclose on the home if your are in default. The fact that your current on your first mortgage does not take away the right of the second mortgage to foreclose. If the home is upside down, the second mortgage may choose not to exercise this right. Many second mortgage are willing to negotiate a settlement because foreclosing on the home would result in them receiving nothing and just incurring the cost of foreclosure.
My experience is that you do not have to reaffirm a mortgage in a Chapter 7 bankruptcy in order to avoid foreclosure. Reaffirming your mortgage makes you personally liable even after bankruptcy for the mortgage. I have yet to see a mortgage company foreclose on a person because they did not sign a reaffirmation agreement. Some people choose to reaffirm their mortgage because some of the mortgage companies refuse to report payments to the credit bureaus if the loan has not been reaffirmed.
This something you should consult with a local bankruptcy attorney as it may affect your plan terms. Whether you will be liable for the balance really depends on whether this a recourse or non recourse loan and this depends on your state law also. There may be issues with your plan being discharged since some of the terms that you stated in the plan you will no longer be completing such as paying the secured mortgage as agreed to in the proposed plan. There may also be issues with doing a plan modification here where you may be asking to surrender the home that is secured and reclassify the secured creditor as an unsecured creditor in order to avoid liability after the discharge. Some courts have found that this contravenes section 1327(a) of the bankruptcy code.
The options that you mentioned are the main options for removing your name from the property and not being the legal owner on the property. There is not much options outside of this to remove yourself as the legal owner of the property and not deal with the mortgage company.
This will depend on whether you signed a reaffirmation agreement for the mortgage loan and whether your state allows a deficiency on the foreclosed home. From the information you provided I cannot tell if you actually signed a reaffirmation agreement as part of the bankruptcy. If you did not sign a reaffirmation agreement for the mortgage or refinance at any time after filing then you will not be liable for the balance.
my x wife is 1st on the house and im 2nd owner..when she takes her name off the deed quick claim can. then do i jus have the deed or do i jus have it since she took her name off.. so do i have the deed or iam still the owner? or does she sign the deed over to me? or hows this work??
Norma,
my chapter 7 was discharged in 2009, and my home was included in the discharge.
I vacated the house about a year ago, and finally, they are moving to foreclosure. Because my liability in the house was discharged, as I understand it, will the foreclosure affect me, or my credit score, in any way? Thanks!
My boyfriends soon to be ex wife filed bankruptcy when they were together but he didn't. They own a house together. She is now saying if he doesn't pay the mortgage that he will be hurt but she won't because she listed the house in bankruptcy and has been released from that. They never stopped paying the mortgage, it was never in arrears. Is this correct?
Hello Norma,
I have read all the posts, trying to find an answer to my questions. So far, this has been very helpful.

My remaining questions are:
1) Should the bank be reporting negative information to ANY of the credit agencies, regarding the discharged mortgage we have been paying (late) on? (we did not reaffirm)

2) Will a foreclosure be listed on the credit report more recently, even though we included the mortgage in the bankruptcy 2 years ago?

We filed Chapter 7 in NY almost two years ago now. We did not reaffirm our mortgage, and included it in the bankruptcy, following the advice of our attorney.

We continued to pay the mortgage as we needed a place to live, didn’t want to change school districts, and I continued to look for better employment.

The mortgage is in my wife's name, and because we made late payments after the Chapter 7 discharge, the bank reported negative information on her credit report (even though the mortgage was discharged).

We have recently checked all three credit reporting agencies. 2 out of the 3 agencies report the mortgage as discharged in bankruptcy, with no negative payment history. However, 1 out of the 3 reports the mortgage as open, with several 30 day late payments, occurring post-bankruptcy discharge, which is crippling my wife's credit score (now in the 500’s). My credit score is back in the 700’s as we have worked hard at re-building our credit over the past 2 years.

I have accepted a much higher paying job, and my wife has since found a great paying position, but we have to now relocate as a result. We are fearful she will not be able to co-apply for a mortgage or lease on our new home, when we relocate, and are fearful her credit history will be damaged permanently if we vacate the home we are in (due to foreclosure on the open mortgage account of the reporting credit agency).
Hi, I am writing from Mass. I became unemployed back in 09 and had never in 8yrs been late with my mortgage payment. I applied for the MHAP and jumped through hoops for my bank. (Chase at the time) They never made an agreement or denial. A year later they sold the loan to LBPS, I did everything asked, nothing. They sold the loan to Seterus Oct 10. I filed for bankrupcy chapter 7 in July of 11. The last conversation the bank had with me was in Aug of 11 in which they stated that it had been over 2 years since I filed for a modification and that there was nothing they could do. I was told to go to my town hall and sign my deed over to them. (Hahahaha). After my briefe period of unemploment I had always worked, had a good, steady, job and there was no reason to not go ahead and moifiy, yet they did not. Infact they stopped all comunication with me . In Nov of 11 I was dx with cancer and took the FMLA from work. I was still recieving chemo and radiation treatments and was unable to return after the 12 weeks and was terminated. I recieved a letter via certified mail from Seterus saying that if the balance was not paid by Aug 26th the would start forclosure procedings. Now just two weeks ago I recieved yet another letter that my loan has now been tranfered yet again. The kicker is that it has been sold back to the original bank Chase!!! I coul not believe it! I am right back were I started! Anyway, at leaste they are communicating with me and say they would like to finally get this modification done and they want me to start the process all over. The problem is now I am not employed. I do not know what to do. They unlike the prior bank has started to send monthly statment saying I am past due over 90,000 dollars. I have no clue what to do at thyis point. What about my taxes and insurace as well. I am sick to my stomach. I did everything Chase wanted when I first asked for there help and I got no where. I'm afraid and do not know wether to start over again. If I remodify now, I do not want to and believe because of
Question: My mom surrendered her home in her chapter 7 bankruptcy filing, which has since been discharged. The mortgage company continues to call me and mail letters addressed to my mother about the balance of her mortgage (which is negligible considering the amount of interest they charged her over the life of the loan versus the balance owed). The language on the letters has been altered to include the disclaimer that if she's filed bankruptcy they are not attempting to collect a debt.

I called them to explain that the property had been surrendered and sold at auction by the trustee appointed by the bankruptcy court, but they keep calling.

We have an attorney, but he has not responded to my email update regarding the bank's continued efforts to reach my mother. She has had a stroke and she broke her hip. I have POA and had it during the time of the bankruptcy.

I just want to know if I need to do anything further in regard to their almost daily phone calls. Any direction you can provide would be greatly appreciated.
I filed for Chap. 7 in 2010, and both the 1st and 2nd mortgages were discharged. I am current and making the payments on both mortgages. However, due to cut-backs at work, I will have to cut back on the 2nd mortgage. Can the lender on the 2nd mortgage foreclose on my house, if I am current on the 1st mortage?

Thanks.
Hi Norma.

I live in California. I modified my first mortgage $240,000 at 2% under the HAMP program and my second $396,000 also HAMP at 1%. This rate is fix for 5 years. My first was easy to modify, but the second took me almost two years (Chase is extremely unreliable and difficult to deal with). The mod with Chase was finalized on Jun, 2011.
I am in the process o bankruptcy chapter 7, I went to the debtors meeting 2 weeks ago. I know I only have 60 days to do the reaffirmation. By all means I want to keep my home, even tough I owe more then the house is worth, I do want to keep it. My payments are affordable now. This days is extremely difficult to qualify for a home loan. It is a beautiful house located in an excellent neighborhood. I would not want to live anywhere else. My dilemma is should I reaffirm my mortgages, my attorney explained to me that if I want to keep the house I should reaffirm, but he didn’t go into details about it. Also Chase sent me the reaffirmation Agreement, but is very general in stating the terms of my modification. It just says the loan amount and that the rate is at 1% variable. It does not say that is fixed for five years and then will go up 1 point every year. It will go up a total of 4 point only during the life of the loan. The reaffirmation agreement does not state that. I called Chase and they told me that the reaffirmation agreement does not have to include all the terms of the modification, that I am just reaffirming the debt. When my attorney first sent me the agreement, he seemed surprised that it was so broad, but now he tells me the same thing that Chase is telling me. I am very confused about it. Beside I don’t trust Chase at all; they are very tricky and always change things that they have previously said. That is why it was so difficult for me to do the modification; I had to complain to the OCC. Wrote a letter to Senator Dianne Feinstein and her office sent the complain to the OCC. Finally Chase executive office took care of my modification, but I am sure I had not c
A couple of years back we went thru Chapter 7 Bankruptcy, and after a while realized that the bank--B of A--had included themselves on the proceedings despite the fact that we'd intentionally left them off of who we were including in the proceedings. Once we realized we couldn't keep up with payments and found to our shock that they had been included in the bankruptcy, we stopped paying and closed down shop in the house. The mortgage included auto payments on the taxes and the home insurance, and the bank so far continues to pay these since we stopped paying the mortgage payments (only had the 2011-12 taxes and house insurance so far, totaling over $2000. Twice they threatened foreclosure, we said go ahead, and nothing happened as far as we can figure out. Choices as I understand it is to:
--wait for a bank to do the foreclosure--which sounds like they'll threaten, but are not following through with it
--somehow sign the house over to the bank in a way that gets our name off the deed--and that sounds like there isn't a way to do that if I read some of your comments correctly
--short sale the house which would require the bank's cooperation and would be expenses for us with the realtor and no financial or other foreseeable benefit other than coming to closure on getting the house out of our name--if the bank even cooperates with the sale. With it being B of A, I'm not sure whether we'll even get a response--that will make it possible for us to go thru with a short sale.
Are there any other possible solutions so we no longer are entangled in the house?
I am halfway through a Ch 13, and live in Massaschusetts. I finally got a long awaited job transfer to Las Vegas. My condo is $38,000 under water. I plan on just walking away. Will I be liable for the balance if it goes to foreclosure?!
Hello. I have a situation all too common with everyone else here. I live in Georgia, and i have been in my home for 17 years. I got behind on mortgage due to several surgeries and job loss. Recently, I was dicharged from chapter 7. I chose to keep my home through the chapter 7 process and continue to make the payments.I did a modification a few months ago, but to no avail to catching up on payments. My bank does not want to work with us anymore. Now they have started forclosure process on my home. We did not refinance. However, during the chapter 7 process the ttorney said i had to sign a letter of affirmation if I wanted to keep my home. It does appear on my credit report as FS (Foreclosure process starting)...will I still be liable for the balance?
If you intend to keep the home then you have to continue to make the payments on the house or eventually the creditor will foreclose. If you do not set up a repayment plan for the arrears and pay your mortgage then eventually the mortgage company will foreclose.
In your situation it is best that you contact your Chapter 13 bankruptcy attorney since surrendering your home can have a significant impact on your Chapter 13 plan and the payments in the plan. Surrendering the property in a Chapter 13 bankruptcy can increase the payment that goes to unsecured creditors in your plan. You can surrender your home at any time in your Chapter 13 bankruptcy, by filing an amended plan. If you stop making the payments on the home eventually the mortgage company should file a motion to lift stay in your bankruptcy, in order to foreclose. When you complete a deed in lieu of foreclosure you don't have liability for any deficiency on the mortgage but there may be tax consequences associated with it, if the debt was not discharged in bankruptcy, and canceled outside.

Most people are able to find a rental place even with a bad credit report. They just may have a bit more difficulty finding a rental location.
As to your questions the following would apply
1) Quit claiming your property to the lender would not renew any liability for the home once the debt has already been discharged in bankruptcy. I dont see any benefit to you quit claiming the deed as this just eliminating your property rights without removing the mortgage from your name.
2). If they have not foreclosed on the home then you should still be the current owner of the property. Until a quit claim, deed in lieu of foreclosure, or shortsale is executed that transfers over your interest in the home, you are still the owner of record.
3) You are entitled to occupy the residence if the home is still under your legal name.
4) The second mortgage should not be sending you statements unless you requested the information. If you do not wish to receive the information you can contact them and reiterate that you have filed for bankruptcy and do not wish to receive any information on the mortgage.
As long as there was no reaffirmation of the mortgage then the lender cannot seek collection from you regardless of it being a VA loan. A VA loan is discharged similarly to other mortgage loans and does not get any special treatment in bankruptcy. The following link provides information on eligibility for VA loan: http://www.benefits.va.gov/homeloans/faqpreln.asp
This question depends on state law. Each state has laws that define what liability a party has for certain type of real estate loans. Please consult with an attorney in your state as this issue is state specific.
My understanding is that FHA loans require at least 3 years from the date of foreclosure to be approved for an FHA loan. If the home has not been foreclosed upon I do not see why this requirement would be an issue, since the home has not been foreclosed upon.
I wouldn't base what is happening with your mortgage on what is reported on your credit report but rather if you ever signed any documents for deed in lieu of foreclosure. Credit reports have a lot of inaccurate information.
This is outside of the scope of what I practice in but there is some information available here: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt072.shtm
A loan can be modified even if it has been discharged in bankruptcy. Many of my clients have their loan modified during or after their bankruptcy discharge. The discharge does not prevent you from being able to modify your mortgage. Since the loan modification is not creating a new mortgage but simply modifying the terms of the existing loan then it should not create any personal liability if your loan is modified.
If you obtained a bankruptcy discharge and you owned the home at the time and listed it in your bankruptcy, then you should not have personal liability if you did not reaffirm the mortgage in the bankruptcy.
My position is that if you are modifying the terms of the original loan then it is the same mortgage and you should not have liability for the mortgage after the debt was discharged in bankruptcy. As long as you are not obtaining a new loan as part of the process then you should not have personal liability.
Norma, I claimed BK and have been discharged, we did NOT reaffirm our mortgage debt. Our mortgage company is now offering a Shared Appreciation Mortgage at phenomenal terms. I have been discharged from the debt but if we re-modify the loan will we be liable for the debt?

thanks
Norma, I am extremely confussed as to what to do... My husband and I who are seperated filed Chap 7 bankruptcy and included our house in it.. Everything has been discharged.. I am currently living in the house in florida and the bank is wanting to see if I qualify for a HAMP modification. I am a single mom on disability raising 4 kids and dont want to be displaced.. They told me i can have my ex sign a quick claim to remove him from any financial obligations if I try to modify.. Can u really modify a loan if your house has been discharged? If you try to modify can it screw up what has already been done..Im affraid if I look into a modification something could be affected against the bankruptcy. Should I just go and look for a rental or can something good come of this and I possibly be able to be helped. Ive tried researching this and im not having any luck. If I choose to let it go into foreclosure how long does the process take and can they just change the locks on your doors or do they have to give u a time frame to allow u to get your stuff out..
I have a question on PMI insurance. My mortgage was discharged chapter 7, but I am still making payments. I'm living check to check and the elimination of $52 a month for PMI would greatly help. Is there a way I can get the PMI cancelled since my mortgage loan was discharged in the bankruptcy?
i filed chapter 7 in 2011, i did not reaffirm the mortgage but i still made payments on my house. im confused because i checked my credit report and it reads deed of lieu. I have never signed a deed of lieu. is this reporting correct? if so what will happen if i walk away from my hone? would i have to wait another 3 years from the day they transfer the deed? Im confused about the deed of lieu reporting
Thank you for ask the advice. We just found out that when we moved back in or home we did not have a reaffirmation. We are considering walking away and I just needed to know if we would be liable.
Hi Norma,
I filed a bankcruptcy 3 yrs ago. I have been approved for a new home purchase and just waiting for seller's acceptance. However, I learned that the titile of the house included in the bankcruptcy is still under my name as the bank still hasn't foreclosed. Can my lender still continue to process my new FHA home loan since I have no obligation anymore? My credit report shows no liabilities except for 2 credit cards and 1 car loan. I was approved by 2 lenders.
Thank you so much for any advice that you can share.
I work with many companies, many investment companies. I have been told that if you are unable to refinance and you have an original loan you can walk away, sending in the keys, as the original loan is a contract that can be given back. Yes or No?
The mortgages for the home were discharged as part of your bankruptcy case. Once the house forecloses then there should not be any liability even if they are adding delinquency expenses. There only recourse for any balance owed will be to foreclosure against your home, but not to come after you. If you do not wish to be contacted by the mortgage company then inform them that this debt was included in bankruptcy and that if they continue to contact you, you will seek possible sanctions for violating your discharge.
We filed for Chapter 7 and our debts were discharge in 2007. We have a first and second mortgage that were discharged and not reaffirmed. We are preparing to go thru a divorce and neither one of us can afford the home in our own. We are upside down on the house and have already stopped paying the second mortgage. They have since been trying to contact me by phone which
I know is a law violation. Today, I noticed that they have added $84 in delinquency expenses to my account. Are they allowed to add these expenses to a loan that has been discharged? If not, how should I handle it?
I live in calif, and I lost my job do the econmy. I only had my income tax in live on that file and got back six thousand.I tied modifing my home loan but after six months the bank refuse the modification leaving me with no money.I fell back six months in payments and the bank foreclose. So I hired attorney and went bankruptcy stoping the forecloser. I never reaffirm the loan and now my discharge has close. do i have too still pay the mortgage. or will the bank foreclose.
Hi Norma,

I filed chapter 13 bk 2.5 years ago, I was granted a great loan mod but am now going thru a divorce and can't afford to keep the home. I don't know if deed in lieu of or foreclosure is the way to go. Will I be liable for the bal. of the loan since it is 125K upside down and needs 80k to finish the remodel. if i walk. should i stop paying my mtg and save until i receive a foreclosure notice, surrender keys, does the bk keep the bank from foreclosing? If I save for 6 months and not pay the mtg and then do a deed in lieu of would I be responsible for paying any money back? so confused. Just need to save some money to move but will I be able to even rent a place due to all this?

Thank you so much for you help!
Lee
I filed bankrupt y on a home purchased for $182,500 with a $0 down VA mortgage.
I have since filed bankruptcy including both the VA guaranteed 1st and a $50,000 second.

1. What is my liability to the VA?
2. Can I wait 3 years (discharged in Sep. 2010) and try for another VA Mortgage?

thank you!
We filed bankruptcy in 2010, discharged in Sept, 2010, and did NOT reaffirm our 1st nor 2nd mortgage. We were in foreclosure proceedings at time of filing and at discharge. Mortgage Attorneys filed a stay due to bankruptcy? Now in April 2012, I have been contacted by a real estate company wanting to Quit Claim my property over to them for $4500?

Can I do this without liability to the 1st and 2nd mortgage holders? We made no payments 90 days before bankruptcy, nor since discharge. We were notified/demanded by bank to leave premise by Dec 31, 2011, which we did.

I just received a notice from 1st Mortgage holder that I contact them about insurance and utilities as the house may be vacant. I contacted them and they informed me it was just procedural and that my name is still on the Mortgage until it is foreclosed.

So:
1. Can I quitclaim the home without renewing the liability on 1st or 2nd?
2. Does this mean my name is on the home as current owner, no foreclosure yet?
3. If 0my name is in the home and both mortgages, can I quietly move back into the home? Until it changes status, and my name is removed?
4. The 2nd mortgage has started sending me statements again, while noting on the front page of the bill that they understand I filed bankruptcy, but want to keep me informed on my monthly and past due amounts. Why would they do this?

Thank you for this most informative Blog
Thanks Norma...can you please clarify your statement:
"If you do not pay for the home owners insurance then generally your mortgage company may pick up the costs and they can potentially try to charge you . If you file for bankruptcy this of course would be included. In general it is a good idea to have home owners insurance coverage until the home is out of your name."

I was given a discharge of my debt. I have not kept up on the home owners insurance. Are you saying the mortgage company could pay that and then charge me??

I have not been able to afford to pay the insurance, (I did file chapter 7 for financial reasons.)

Ken
Your best option in this situation is to try to do the following:

1) Wait and see what happens when the home forecloses. There is a possibility that the HOA fees will be paid off as part of the foreclosure and that there will be no outstanding liability after the foreclosure. Hold the monthly HOA fees aside to ensure that you have the funds in case they are not paid off and the home owners association decides to seek collection from you.
2) Pay the ongoing fees if you are concerned and do not want to wait an see what happens when the property forecloses.

Generally it is best to hold the funds and wait until the foreclosure occurs to determine if the HOA company will hold you liable if the fees are not paid through the foreclosure.
To protect yourself I would of course make sure that any agreement is in writing. If you are concerned that the lender is not being honest then you can consider filing a Chapter 13 bankruptcy where you would pay back the arrears as part of your Chapter 13 bankruptcy. The Chapter 13 bankruptcy would allow you to repay the arrears on the property over a period of 60 months. You can file the Chapter 13 bankruptcy even though you had a previous Chapter 7 bankruptcy filing. I am assuming you do not have any unsecured debt and that you would only be paying back the arrears as part of the bankruptcy. Filing the Chapter 13 bankruptcy would stop the sale of the home.
If you do not pay for the home owners insurance then generally your mortgage company may pick up the costs and they can potentially try to charge you . If you file for bankruptcy this of course would be included. In general it is a good idea to have home owners insurance coverage until the home is out of your name. You do not want to end up in a situation where you have liability post bankruptcy for an incident on the property. I would recommend that you continue to have coverage on the property until the home is out of your name.
If you are paying for the insurance and the insurance covers the incident that occurs then the bankruptcy should not play any role on being paid the coverage. The bankruptcy should not affect your ability to have coverage for any event that is covered in your home insurance policy.
You should be able to pay it off normally without any issues because of the bankruptcy. The only thing that it may affect is that they may not report your on going mortgage payments on your credit report. I am assuming you filed for Chapter 7 bankruptcy and that it has already been discharged, given the timeframe. If you wanted to reaffirm the loan then you would have needed to do it while your bankruptcy case was open. In generally I don't think reaffirming your mortgage loan is a good idea.
I filed for BK at the end of 2011. I walked away from a condo for various financial problems. The condo is scheduled for foreclosure in June. I have not made any HOA payments since the BK. They have been sending me statements of the outstanding fees. Is there any chance that the outstanding HOA fees will be wiped clean after the foreclosure process is completed, or should I be making monthly payments now?
We filed chapter 7 and was discharged Dec 2011. We called and called to reaffirm on our mortgage but never heard anything back from our lender. Our lender was pretending to help us with a Loan Modification and wasting time and time until now our property just went into foreclosure 4 days ago. We talked to our lender and they agreed to put us on a repayment plan. We are behind 17,000 and our lender wants us to give them 9,000 down and spread the other payments out over 6 months. Our problem isn't paying the mortgage, it is the past due amount. We are nervous about doing this, we don't want to give them our money and they foreclose on our property. Is it possible that they would do that to us?

Thanks
Vic
If you cancel the insurance and the mortgage company covers it they may try to charge you for this but I have generally never seen them go after a debtor for this after the foreclosure process. I would recommend that you still keep the insurance until the foreclosure on the home simply to avoid any possible liability issues until the home forecloses. There is always the potential that someone may get hurt on your property and if you are the owner of the property at the time then the liability will fall on you.
This really depends on your area and what judges in your area see the issue. In the Central District of California, the common practice is for debtors not to reaffirm their mortgage but stay and continue to make the monthly payments. The most common practice is this but it may vary in your region. Generally when the practice is similar in your area, you can continue to make your regular monthly payments and remain in the home. The only thing that really changes, when you don't reaffirm, is that you have no personal liability for the loan and on your credit report it will be listed as included in bankruptcy. If you ever decide to walk away from the property you will not have any personal liability for any deficiency. The bad side is that you will not receive credit on your credit report for the ongoing monthly payments.
Hi we filed bankruptcy and were discharged in Oct 2011. We plan on keeping our house and have never been late on a payment. Would it be better to reafirm our loan or does it not really matter? Will we still be able to pay it off like normal or does the bankruptcy do something to the loan?
you have already answered most of my questions on other responses, i wish you were in NorCal! i stopped paying 1st & 2nd to get a chance for modification, which didn't happen. we already claimed insolvancy due to business problems the year before, so our clear option was bk chapter 7 to avoid tax penalties. we had no consumer debt, in fact i had to buy two cars to pass the means test. we are keeping the cars but giving up the house. i plan to stay in the house until the forelcosure process ends. am i liable for home insurance during this period? thanks again for all the great information!!
hello. My house was not reaffirmed during my bankruptcy. Will allstate pay me if something happens to the house as the insurance is current? I am asking because I want to know if I should continue paying my insurance premiums.
Unfortunately I do not have any great news. Many mortgage companies took a long time foreclosing on the homes and leaving the homes vacant for a long time. Until the home is actually foreclosed your interest in the property still remains with you regardless of you not living in the property. It is not until the foreclosure process is completed that all legal interest in the property passes to the purchaser. In your situation the extended time that the company took in foreclosing on your property had a detrimental impact on being able to purchase a new home. Unless you can show that the foreclosure actually occurred earlier, you may have to wait.
There is no amount of time assuming that you didn't refinance the home or obtain a new loan. If you obtained a discharge in your bankruptcy and the home loan was included and not reaffirmed, then the debt should be discharged, regardless of the time you continue to pay the loan. If you default at any point, the mortgage company can only seek to foreclose on the home but cannot come after you for the difference.
You need to consult your attorney in this matter as the bankruptcy exemptions that you can use are state dependent. If the homestead protection that was used in your bankruptcy can cover the equity that was in your condo, the the creditors should have no right to touch the condo as an asset. Your situation depends on the equity that existed in your condo at the time of filing and the homestead protection available in Nevada. If the bankruptcy homestead exemption covers the equity in your condo, then creditors are not entitled to touch your condo.
The request to have you loan modified should not have made you personally liable for the loan after the bankruptcy discharge. Most lenders have not required that a person reaffirm their debt in order to obtain a loan modification.
mortgage was not reaffirmed during chapter 7 bk 10 years ago (which i was not aware) I tried to do a loan modification last year. I submitted all the paperwork they asked for and signed it along with a hardship letter. They denied my loan modification due to no reaffirmation. my question is...did my signing the required paperwork to process my request make me liable again even tho they denied the modification?
Generally if you owe HOA fees when the home foreclosed, the HOA company may seek collection from you or it could potentially be paid as part of the home sale. Similarly real estate taxes are many times paid as part of the sale of the home in many states. Generally taxes are assessed against a property and not against the the individual. In sales the buyer may pay the real estate tax liability to clear title. You will need to look to your state foreclosure laws to determine the likelihood that you will be liable for HOA or real estate taxes after the foreclosure.
I filed Chapt 7 after a job loss and was told by my attorney if I filed a homestead I would not lose my condo. In reading the mortgage agreement it states if I file bankruptcy my credit union can foreclose on my condo for default. It also states that they can demand payment. The sad thing is I owe only $7,700.00 on it. I unfortunatley don't have that much money. My mom has offered to pay it off and I can make monthly payments to her (her name is also on the loan) what will happen to my bankruptcy if she pays the mortgage off? I haven't even had the 341 meeting with the creditors yet. I've e-mailed my attorney but have gotten no response. I live in the state of Nevada and the credit union I belong to is playing dirty and I don't trust them. I don't want to lose my home with such a small amount due to pay it off. What are my options? Any help would be appreciated.

Thank you.
Hi Norma,

I want to know what is the length of time an individual is protected from personal liability with a mortgage company after being discharged from Chapter 7 bankruptcy. If they did not reaffirm the mortgage and kept making payments after discharge. Is there a maximum time period that the mortgage company cannot come after you if the loan defaults or goes into foreclosure.
Hi Norma,

I, like others, had a BK7 discharged in June of 2008 and included the home. I do live in California so you might be familiar on this issue. We actually moved out of our home in November of 2007 when we decided to do the BK. Told the company that they could come in at any time. We filed for BK in March of 2008 and it was discharged. But the lender took until 7-2009 to foreclose on the home. There was a document that we received regarding an automatic stay on the home by the lender so that they could move ahead with the trustee sale that was in 6-2008, a short time after we received the discharge.
Our problem, is that we just entered into a purchase agreement with a new home. No issues since it was 3 years past the BK discharge date for FHA loan. Now the underwriter is stating that the foreclosure is in 7-2009 so therefore our loan cannot be done due to it being less than 3 years, even though it took the bank a year to foreclose. How can this be my issue? Countrywide was the lender and since they were bought by BOFA, I believe that the integration slowed everything down, along with the lawsuits being filed by other states, and this impacted my ability to purchase.

Do I have any legal recourse or can this be corrected? I did not stay in my home one day after I stopped making payments and filed for BK. I called them and they did not offer to do a deed in lieu of foreclosure and basically said thanks for letting us know. I need your guidance on this and appreciate your time.

Tom
Whether it is customary to reaffirm the mortgage on your home is really dependent on the region where you file for bankruptcy. Similarly with regard to your car loan, this is really dependent on the region you file. In some areas it may be required that you reaffirm your car loan while others will allow you to just continue to make payments on the car loan.
If the home has not foreclosed then you can still try to contact the mortgage company and attempt either to set up a repayment plan for the arrears or apply for a loan modification. As long as the property has not foreclosed you can try to contact the bank to see if you can get a loan modification that can help you keep your home.
Your best option would be to contact the Federal Housing Administration for guidelines or a mortgage lender on what is required to do an FHA refinance. Generally my understanding is that you need at least 2 years from date of a Chapter 7 discharge to refinance with FHA.
My position would be that simply doing a loan modification does not create new liability for the loan. If the mortgage debt was not reaffirmed in your bankruptcy case then you should not be liable for any deficiency on the home if you walk about. Second unfortunately most mortgage companies still report the foreclosure of your home on your credit report.
We filed ch 7 and was discharged in 09. We kept our house and at the time had our payments on time. Now we are year and a half behind and recently found out our loan was never reaffirmed . We really want to walk away and start our lives over. We have been denied a modification. Did we reaffirm when applying for a modification? Also out lawyer told us we are not liable for debt. However a realitor told us once the bank forecloses it will be put on our credit As if we just filed even though we actually did in 09. What is the truth? How can we start over? We live in tn.
We closed a busniess and had to file chapter 7 bankruptcy July 2011, we did not realize we had to include our home. We wanted to keep our house and our car and we did, we are in WA state. We have an FHA loan, we have not been late on our mortgage, and pay it every month, our credit score is 645- 672, we are looking to see if we can streamline refinance to get a better rate but cannot get a strait answer. Do we have to wait two years to reapply for a whole new mortgage since the old one was discharged in the bankruptcy?

We misunderstood our attorney we kept telling them we did not want the mtg or car included in the Bankruptcy but we did not have a choice with the mtg we found this out after we traded our car that our mtg was on our credit report as discharged.

Anything to help or advise
My wife and I struggled for 2 years trying to make ends meet finally, hardship and the harrasing calls and booming inters rates urged us to file for a ch. 7 we gave back everything including the house. Now were getting letters of foreclosure and lawsuits from the banks. My question is is it possible to renegotiate the mortgage with the bank or start paying on it again or is there really nothing else to do but wait to get kicked out of our home. thanks any help will be apreciated.
I filed for Bankruptcy and my court date is this month, I am keeping my car and my home, so I hope. My Atty never mentioned anything about reaffirming at. He only told me that even though the mortgage and car company won't send a bill, just continue to pay because I have never missed a payment. Should I reaffirm these companies or not, I.m confused especially since the Atty never spoke on it.
I am not fully familiar with the foreclosure process in Florida. This website may provide some insight as to how you are notified and the time frame: http://www.realtytrac.com/foreclosure-laws/florida-foreclosure-laws.asp
Jessica this depends on what you are trying to accomplish. It is not necessary for you to wait for the lender to take action before you move forward with filing for bankruptcy unless their is some objective you are trying to achieve. If your intent is to surrender the property then you can simply state your intention as part of the bankruptcy. The timing of the filing will depend on reviewing the facts of your case and determining based on that when it would be best to file your case.
You can eliminate any liability for a mortgage on the property through filing for bankruptcy protection if you qualify. The important thing to do in your situation is to talk to a local bankruptcy attorney in your area to first determine if it is necessary for you to file in order to eliminate this liability and second to determine if you qualify to file for bankruptcy.
The collection company's only ability would be to foreclose on the property. If they are contacting you regarding the loan on the condo then you need to contact your bankruptcy attorney right away. They are violating your discharge order by contacting you about a debt that was included in your bankruptcy.
The amount may be paid off as part of the foreclosure/sale process but I am not aware of how sales in Florida are conducted and if the HOA has priority over the mortgages on the property in Florida. Depending on your state when a first mortgage forecloses many times it extinguishes junior liens on the property including HOA liens that are junior to the first mortgage. In many cases for an underwater home, there will be no money to pay the HOA company if they are junior to the mortgage. This does not mean that the amount that you owe the HOA is extinguished when the lien on the property is removed. What I can tell you is that they cannot charge you for any pre-petition HOA fees that were due. These should have been discharged as part of your bankruptcy case. I would set funds aside to cover the HOA fees post-petition and wait until the foreclosure/sale to see what happens when the property sells.
Ralph the mortgage company only lost their claim against you personally but they did not lose the claim against the home. This means that after your discharge they are not entitled to come after your for the debt, but they still maintain their security interest against the home and can foreclose on the home. When they lose their claim against you it does not mean they lose the claim against the home. If their is mortgage against the home then it still remains a lien against the home even after the bankruptcy case, and you do not own that portion simply because you filed for Chapter 7 bankruptcy and obtained a discharge.
If you are struggling every month and are having to pay for necessities using your credit card every month then bankruptcy may be a good option for you. If you don't feel comfortable with what the initial attorney informed you then talk to several local attorneys in the area to discuss your options. Most bankruptcy attorneys should explain to you the different options and how they work. It really depends on looking on your particular financial situation and your ongoing expenses to determine if bankruptcy would be a good option in your situation or whether bankruptcy is not the right solution in your case.
This is really depends on your financial situation. Many banks will consider working with you on a loan modification even after the bankruptcy. You will need to contact them directly and submit any necessary paperwork to determine if you qualify.
If you receive a discharge in your Chapter 13 bankruptcy then you have no personal liability for the mortgage. This means that if you walk away from the house, the creditor has a right to foreclose on the property, but cannot come after your for any deficiency on the loan. If your home is foreclosed you will not face any personal liability for any remaining balance on the loan.
Hi , I reside in Miami Fl. my Bk Chapter & was discharge 23 moths ago. I did not reafirm my mortgage and I haven"t been paying mortgage. My question is, before the bank forecloses on my property do they have to give me notice and papers of foreclosure? and if they do, about how much time do I have before having to vacate the property. Thank you
Hello Norma, my husband and I own two homes, one in Arizona and one in Michigan. We are going to file chapter 7 bankruptcy on our credit cards and our Michigan home, which we are currently a month behind on. Would it be best to wait a little longer before filing bankruptcy so the lender can start to take action first or should we file asap? Thank you.
I purchased a mobile home through Vanderbilt Mortgage a few years ago. I no longer live in the home because I had to move to a better area for my family, work, ect. I have a renter living in the home but they are late on the pymts. The home may go into foreclosure and I live in the state of KY. If the home if foreclosed on can I file bankruptcy to avoid paying the lender any additional costs?
Hello,
My husband and I had a bankruptcy discharge in April of last year. We did not reaffirm on our mortgage. We are separating and intending on filing for divorce. He wants a loan modification so he can stay in the house. My name is on the loan as well, but I want no part in signing anything and becoming obligated to make payments. I am getting an apartment on my own. What should I do to make sure I am not obligated on this loan modification?
I filed a chapter 7, it was discharged after about a year. The mortgage company never came to the credators meeting and never stated a claim at any time even though they were notified. I asked my BK attorney what happened to the mortgage company after the discharge, he wrote me back and said that they had no more inertest in the property and I could sell it without any payment to the mortgage company. Then a year later they filed a new forclosure against my wife. How can they do that after they lost their claim against me. The morgatge was in both our names. If they do foreclose on our home and win wont they only be able to claim her half because I own half and they were discharged.
I'm very confused what to do about my financial situation. I'm a single mom and my income falls short about $500 every month. Iv'e been using my credit cards rotating them when I have paid the minimum on one, the next month I just put it back on.... My mortgage is $980, behind 2 months.... and my cc debt is around $10,0000 along with other secured debt grand totaling around $24,000 in debt. I don't want to keep the home and plan on moving out of the area as soon as I get a better paying job. Iv'e spoken with a bankruptcy attorney and his solution is to file Chapter 13 on everything and when I'm ready to move..do a deed in lieu of forclosure. He makes it sound so convenient and simple!!! Yet, I'm very hesitant. I think I could consolidate my cc's into a credit consolidation company and try a short sale or deed in lieu...? Perhaps I could just pay my mortgage every other month while I was marketing a short sale?
The debt from the home cannot be reaffirmed after the bankruptcy has been completed through a deed in lieu of foreclosure. Any mortgage amount owed on the home at this time you are currently not liable for. A deed in lieu of foreclosure is an option to transfer the title our of your name without having to do a foreclosure. Deed in lieu of foreclosure does not create any additional liability for the property and it cannot be used to reaffirm a debt that you discharged in bankruptcy.
Unfortunately many of the banks still list on your credit report the foreclosure even after the bankruptcy filing.
My wife and I filed a chap.7 and recently was discharged. We didn't reaffirm the debt on our mortgage. We haven't made any payments for about 7 months. Will our bank even consider a modification or will we have to lose the home?
Norma,
I purchased a home in 2007 on a VA loan. My wife and I divorced in 2010 leaving me with the house, the kids, and the bills. I filed for Chapter 13 BK in Jan 2011 and scheduled for discharge Jan 2014. The house was not included in the BK and no reaffirmation was signed. I tried to have the finance company refinance to lower the payments, but they refused. I am current on my $2000 per month payments. My son graduates in 3 years and I would like to move to start a new life. I have a hypothetical question: If I remarry and decide to move (hopefully the job market will keep me employed) will I be held liable for the mortgage if I allow the house to be foreclosed? Or opt for a short sale?
Much like Nicole (post on Jan 24th), we are in a similar boat and cannot get a straight answer from anyone, including our BK lawyer. I'm hoping for some clarity here! :) Our bankruptcy was discharged in 2010 (Michigan) and it included a mortgage which had never been late prior to filing, so no foreclosure proceedings took place before the bankruptcy. We literally handed over the keys to the bank and moved a month after filing. As of today, there still has been no action on the property and the deed is still in our name. We recently tried to get pre-qualified for a new mortgage in a new state and were told that they basically see us as being held hostage by the old bank because we cannot really move forward until that property is settled. After several attempts at securing a court date which has never materialized, the old bank sent a letter asking us to sign a Deed in Lieu of Foreclosure. Why? I have no idea. Why would they want this now after all of the attempts to take it to court and not going through with it? We are afraid that this might some how reaffirm the debt or hold us liable for the delinquency amount and/or open up a can of worms we don't know about yet. I don't know what our options are. Since we filed bankruptcy, is it in our best interest to just sign the Deed over and move forward or is there maybe a chance that they can come back at us negatively? Realistically we just don't want the foreclosure on our newly clean credit report as it will prohibit us from getting a new mortgage from 2 years after it hits, BUT I am unsure if it will even pop up on there later if we do nothing.... can they do that?
My wife was discharged from a chapter 7 over 2 years ago which her condo was apart of and no reaffirmation agreements were signed. However, the mortgage company never foreclosed and sold the mortage to an investment company. The investment company as turned it over to a collection company that is trying to collect on the same mortage that was discharged in the bankruptcy and foreclose on the property. Is this possible?
Hello Norma. I owned a condo which I discharged in bankruptcy ch. 7 in
november of 2011. I have since received a letter from the HOA attornies saying that I owe back fees dating back a yr. almost. They are asking for dues that pre-date the bankruptcy. I didn't even think they could do that. I have read that I am still liable for HOA's after bankruptcy as long as the condo is still in my name, even though I filed bankruptcy. I have also read, that the primary lender, (wells fargo in my case) many times will pay off the HOA so they can sell the house at auction. I was just curious as to what kind of advice you could give me on this. Am I correct in assuming that the lender cannot sell the condo while there is a lien still on it? I was just wondering if I will be alright if I just wait out the foreclosure on my condo? That way the back dues will have to be paid by the lender. I live in FL.
I claimed bk in Feb 2010 with the house in there. My ex didnt claim bk until later. Now the bank is foreclosing on the house. So will I have a bk and a foreclose on my credit report?
I do not know what your liability would be if they foreclosed on your home in your case since I do not know where you are located and your state laws. Although generally I don't advocate short sales if you have liability in your case, I would suggest that you try to negotiate a regular short sale in which the second is prohibited from seeking a deficiency judgment or else attempting to settle the second mortgage. I am not familiar with HAFA short sale requirements, but overall short sales do not require that you reaffirm your mortgage in the bankruptcy. The other option is just to wait and see if the second mortgage ever tries to file a lawsuit to collect on the debt after the foreclouse. Many second mortgages fail to ever file a case against you to collect on the debt.
The only think that i can tell you based on what you have described is that you don't have to be concerned about being liable for the mortgage on your condo since you did not reaffirm the debt in the bankruptcy. Even if they foreclose they you will not have liability for the outstanding mortgage amount. If your condo has HOA fees then you may still be liable for any unpaid HOA fees from the condo. I don't know if it is necessary to appear in court for your foreclosure or what it requires since I do not know what state your in and I may not practice law in that state.
Eventually the second mortgage may decide to foreclose since in your case it sounds like they would receive something as a result of the foreclosure. In your case there is value in the home above what is owed on the first mortgage, which would allow the second mortgage to receive something if they were to foreclose.
Generally mortgage companies will still list a foreclosure on your bankruptcy even though the debt was discharged in bankruptcy. Whether you will be able to purchase another home is really dependent on what your credit score is now and whether you will be able to find a company to finance the purchase of a new home. Banks have become a lot more stringent in deciding who they lend money to.
This really depends on your particular financial situation. In some cases it may help you in obtaining a loan modification. Some mortgage companies may look on your case more favorably after a discharge since you have eliminated personal liability for debts that made the home payment unaffordable before (even if modified). The mortgage company may be more willing to modify your mortgage if other liabilities have been eliminated, but this is by no means a guarantee that they will be willing to modify your mortgage.
I purchased a condo 2006; Then refinanced in 2008; My Chapter 7 Bankruptcy case was just discharged, and I have now received foreclosure papers on my condo. I remember my lawyer telling me that I didn't have to re-affirm my mortgage, and so I have signed NO paperwork to do so. Now, I am delinquent in my mortgage, and have not applied for a modification since March. I stopped paying my mortgage when I began filing for the bankruptcy. I resigned some papers to keep my auto, and have been up to date on those payments. I have ZERO equity in my condo, am 6 months late, and I am required to appear in court in March 2012 for foreclosure. Should I hire a lawyer? or just show up on the court date provided on the summons? Any information is helpful. You have answered many other questions I also wondered through other people's cases. THANK YOU
after chapter 7 we did not reafirm our 1st and 2nd mortgage and know i cant pay my second mortgage the 1st is123 and the 2nd is 225 the value of the house is 260 do you think the 2nd mortgage will foreclose?
Background: We have a 1st and 2nd (home equity loan) mortgage. I filed chapter 7 which was discharged two years ago. My wife filed chapter 7 last year and was discharged in October. For what ever reason I reaffirmed on the 2nd mortgage, but did not reaffirm on the 1st. My wife did not reaffirm on either the 1st or the 2nd. I work part time, she works full time. We are current on both mortgage payments. The total amount we owe on our home is (1st 135,000 and 2nd 40,000) more that what the home is worth (150,000)

Situation: My wife's employer is moving out of state, so she must relocate or loose employment. Once we move any part time work I do now will cease. I have checked into the HAFA short-sale program, but it appears we would have to reaffirm the mortgages to be considered . . . which we do not want to do. We could walk away, but I would still be liable for the 2nd mortgage. I thought about forcing the hand of the 2nd mortgage holder, by letting them know I have no financial means in which to pay back the loan, but I'm not sure if that's such a good idea.

What would you advise we do?
Hi,
I've been discharged from a cp 7 bankruptcy two years ago. I did not reaffirm the house and I am current on payments. Would foreclosure show on my credit report even though my loan is not reported to the credit report?
Can I buy a new (foreclosed) house and then foreclosed mine? The value on my house is really low compare to what I have left to pay, so I am looking for a better deal (to buy more house for a lower price). If I take a loan would it be consider for the second mortgage or principal? Thank you!!
Do you think I will have more leverage with a bank after a discharge to modify my mortgage. I was just discharged under Ch 7. I have been putting mortgage payments aside for the past 3 months because I'm trying to get a modification but the bank just now assigned my case to a worker and the papers have to be resubmitted because they expire after 90 days. I don't want to foreclose but I want to have the principle reduced as my home is so upside down. If I send in the paperwork again, I feel like I'm submitting to them when now that I'm discharged, they should want to make an agreement. What is your thought?
My husband and I had a Chapter 7 discharged in November 2008. When the bank refused to modify and threatened to forclose, we told them they could have it and left. We never reaffirmed the loan. We are in FL and the foreclosure is STILL not done. It's "frozen." It's been over 3 years since bankruptcy discharge and foreclosure has been "stuck" for two and a half. At this point, we should be able to buy again based on bankruptcy rules, but will the "frozen foreclosure" keep us from getting a loan?
Simply making a payment toward your mortgage does not create personal liability for the mortgage unless you reaffirmed the mortgages as part of the bankruptcy. Simply continuing to pay the mortgages after filing for bankruptcy or after your bankruptcy case is discharged is insufficient to create personal liability for the mortgages.
I don't know which state you are located, therefore I do not know the length of time that the foreclosure proceedings will take in your state. Here in California in order for a mortgage company to foreclosure they must provide a Notice of Default and wait a period of 3 months to provide the Notice of Sale Date and then set the sale date 21 days out from the Notice of Sale Date. During this time people are not paying their mortgage and saving their money for moving costs and expenses. It is common for people to save the money that they paid as a mortgage during the foreclosure process and to file for bankruptcy during this period. Filing for bankruptcy can potentially buy you a few more months in the home.
Did you reaffirm your mortgage as part of your bankruptcy. If you did not reaffirm your mortgage as part of your bankruptcy then you have no personal liability on the mortgages even if the property forecloses. As long as you did not refinance after bankruptcy, then there is no need to complete a shortsale to avoid any liability issues. From what I have determined there is very little difference on the impact that a shortsale and foreclosure has on your credit score. Time frame for leaving the premises is dependent on your state laws. Every state has different foreclosures laws that require a certain period of notice.
i sign modification 1/13-12 before disharge chapter 7 1/23-12 do i create new liability because i lost job my realtor try to lower the payment to the morgate company she paid 2 month for my morgate
thank you
Hello there. It has been over 2 yrs since my Chp 7 discharge & I did not reaffirm my 1st or 2nd mortgage on my townhome. I continued to pay on both mortgages, but lost my job at the very end of 2010. I plan to walk away from the home. My question is...I pay my HOA, Insurance and property taxes seperately each year. So if I do walk away from my home, am I still liable for the property taxes here in Tx? What about the HOA dues I'm behind on. If they forclose on the home, would I have to pay overdue taxes & fees? Thank you for the time..
We are upside down on our mortgage, and due to economic problems our business closed. This loss of income [ small as it was] and the increase in fuel and other needs has created a domino effect on our money out flow. We are now facing lawsuits from creditors against the business causing us to look towards bankruptcy. My question is, we are looking to relocate closer to work and school and being upside down we wont be able to sell this home and get out what we need to start over. can we go through the bankruptcy then let them foreclose and stay through that and bank that money? so we can have something to start new with or will they come after that also.Thank you for your time just reading this lifts alot of weight from our shoulders ... Jim and Maureen
I was a self employed contracted worker and lost my job, could not collect unemployment, eventually I had to file chapter 7 bankruptcy that included giving up my home which I could no longer pay on. I was discharged over 2 months ago but my case is still not closed. My paid off car is falling apart, (I would like to sell it before something else breaks, but was told I cannot) and bills are stacking up now that winter is here...I cannot sell anything or draw against what is left in my IRA because my case is not closed and it could be deemed as unprotected assets. The bank is now foreclosing on my house, the sheriff sale is less than 3 weeks away. My home is on over 3 acres so I will have a 12 month redemption period which begins the day of the sheriff sale. I have exhausted all my savings, have no money and sold all I can, and I still cannot find employment in my rural area, so I am looking out of state for work. My question is: to avoid abandoning my home in case I cant find work out of state and so I have something to fall back on in case I can't survive out of state, can I take on a renter/roommate to help survive and keep up with the utilities so I can protect my redemption period? I need to buy more time, and I need to utilize the redemption to try and get back on my feet. Also, in the process of seeking a renter / roommate I have found families willing to rent my entire house, but without me as a roommate...can I rent my house out during the redemption period to generate money to help me transcend to a new location and get back on my feet? I have been told "yes" but I don't want to do anything that is not allowed. Thank you for your help.
My husband and I filed bankruptcy and was discharged in November 2010. We included our home in the bankruptcy with the intent to stay in the home until foreclosure (keeping in mind to save money during this time frame). I know that our mortgage has been bought and sold 3 different times since our bankruptcy and no action has been taken place with the courts. There have been different options that we may be available for by the lenders. Would a short sale be a better alternative credit wise than forclosure? Also, once the lender files with the court system, how do we know when we should leave the premisis. (time frame) Thank you~
Whether your second mortgage is willing to settle for less then the owed amount is really lender dependent. Some lenders are willing to negotiate a lump sump settlement for the HELOC or second mortgage while other lenders are not as open to this option. I have had numerous lenders who have offered clients to settle the second for a lump sum amount and other lenders who are unwilling to settle. The HELOC company should not report anything on your credit report as this amount should be listed as included in bankruptcy.
If you are not current on your mortgage payments the Chapter 7 bankruptcy does not stop a lender from having the ability to foreclose on your home once you are out of bankruptcy. Chapter 7 bankruptcy only temporarily halts the sale of your home. Once you are out of Chapter 7 bankruptcy then the automatic stay no longer applies and they can continue with the foreclosure process if you are not current. The lender can come back also with a higher mortgage payment if this is what your loan terms require.
Although most banks will not report late payments for a mortgage that was not reaffirmed, this does not mean that they will not report the foreclosure. Unfortunately the foreclosure can still impact and lower the credit score that you have been working on improving. The time it will take for a foreclosure to happen will depend on the state in which you live in and the required notices. Although it may be difficult to rent in certain complexes I have never had a client state that they were not able to find any rental location because of a bankruptcy or foreclosure.
Hello , I have filed chapter 7 and it was dischrged 6 months ago. I had intentions and I am still keeping up with my first mortgage and my heloc with family helps,with hopes that my salary would return to normal. Well it has not and the house is underwater. I can afford my first mortgaeg but not the heloc. Do you think the heloc company will settle for a lesser amount and will this hav any negative affect on me ,it was included in my bankruptcy and I never reaffirmed either debts. I am in new york. Both loans are current and not past due ,but with my salary not returning to normal I cant pay it. I am wondering what the odds are that my second will settle for a lesser amount than thatwhich is owed. Thank you for your time.
My home was foreclosed and I could save it by going for Bankruptcy under chapter 7. Now that I am out of bankruptcy, can the lenders come back to foreclose my home again or come back with higher mortgage payment. I bought the home for $ 475,000. The current value is about $ 250,000. I am paying only $ 1,200/month now.
Thank you, Norma, for taking the time to respond to my query. It is very generous of you to help the rest of us with all of these ambiguous issues!!
I believe that a foreclosure or a notation associated with a shortsale should not be placed on your credit report since the debt was discharged in bankruptcy, but the reality is that most lenders will still report it to the credit report as a foreclosure or other notation association with shortsale. The creditors argument is that it is a accurate to report it as a foreclosure since the bankruptcy did not transfer title to the property. The shortsale may not prevent any type of negative notation on your creditor report if the lender decides to place information associated with the payment of less then what is owed on the house.

As long as you hold the deed of trust to your house you can remain in the home. This means that as long as the property has not been sold or foreclosed on then you can remain in the home.
Our chapter 7 bankruptcy was discharged in march 2011. We have a first and second mortgage and are under water about $ 75000 (25%). We did not reaffirm but are now having trouble making the payments. Will late payments continue to effect our credit report? We are considering walking away and renting which would save us between $600-$800 per month. I'm figuring that our credit score could not get worse with foreclosures, am I correct, or no? We are trying to increase our score with small unsecured cards. Im afraid we will not be able to get a rental if we stop making our mortgage payments. Help.. please.
Norma, I have read everything posted here, which actually describes our situation exactly. We have chosen to stay in the house after Ch 7 bankruptcy in 11/09 but now cannot pay either first or second mortgage because of loss of income and increase on 1/1/12 of first mortgage payment. The bankruptcy is shown on my credit report and I understand you to say here that the bank's only recourse is to foreclose on the property. If we are already bankrupt can the foreclosure be noted on our credit report? Will a short sale prevent that action on our credit report and enable us to buy another (cheaper!) house in another area? Can we stay in the house without paying during the short sale period? Thanks for whatever advice you can offer!!
If you never reaffirmed any of the loans then if you decide to stop making payments on any of the mortgages the only recourse of the mortgage company is to foreclose on the property. The fact that the mortgages are with the same company does not affect whether you can let go of one of the properties and keep the others. Each house is governed by separate loan documents and defaulting on one has no effect on what the creditor has a right to do with the other.
If you never refinanced the loan after filing for Chapter 7 bankruptcy then you should not have any personal liability for the mortgage on the property. If you decide to walk away from the property then the only recourse of the mortgage company is to foreclose on the home, but they will not have any ability to seek any deficiency from you. Your personal liability was removed as part of the Chapter 7 bankruptcy. As to the creditor reporting information on your credit report, it appears that there are cases that go both ways on whether this would be considered a stay violation. In some areas courts have held that the continued incorrect reporting of information on credit reports is a stay violation. I would suggest that you contact a local attorney to determine whether you have some recourse for the continued reporting of the mortgage payments on your credit report, for a debt that was discharged in bankruptcy.
We did not reaffirm our mortgage after our chapter 7 which was 2 years ago. We continued to pay on a unspoken agreement of we pay and stay. Our "mortgage" (which was discharged) was sold to a new company last month. New mortgage company is actively trying to collect and they are reporting to credit agencies. Shouldn't BK protect us from this? And what, if any, recourse is there? We are planning on walking away from our house, but now with them reporting on this discharged mortgage it ruined our credit and I feel like we are back to square one. We are afraid to talk to the new mortgage company for fear that they will tell us since we paid that we are still liable.... are we?
I have been granted a chapter 7 and i have 3 rental houses with same mortgage comp. and I don't want one that's in another state can I let it go and still keep other loans
I have not reaffirmed any loans just been making payments
If you did not reaffirm your mortgage as part of your bankruptcy and did not refinance your home after bankruptcy, then you should not be liable for any deficiency difference after your bankruptcy discharge. If you decide to walk away from your home, you should not have any liability from the mortgage.
i didnt reaffirm with my mortgage company after i filed chapter 7 on my bankruptcy a while back and now i am not ables to make my mortgage payments. now would i be liabiable for any damages to my home if i walked away from it in the future?
Angie this is an area that you should discuss with a family law attorney as to how better to approach the handling of this property in the divorce. What I can tell you is that if you did not reaffirm the mortgage loan in your bankruptcy, then you no longer have personal liability after your bankruptcy discharge. This means that the mortgage company cannot come after your for any difference owed after the property forecloses.
I have a joint property with a mortgage that was discharged in Bankruptcy in 2009. My husband and I are separated and finalizing our divorce. My husband is still living in the house, but has not been making mortgage payments. The bank has not yet foreclosed on the property. What is the best way to handle the property in finalizing a divorce?
During BK I chose to reaffirm my mortgage but the mortgage company did not make an appearance at the BK in any way, shape or form and as such the court discharged the amount of the mortgage. I contacted the mortgage company but can never end up speaking with the proper person and no one will return my calls. The mortgage company does not send monthly statements. I, however, have continued to make payments (basically rent) to ensure that I am not kicked out of the house. By making these payments have I "reaffirmed" the debt or have I simply been paying rent, since the mortgage amount was discharged, in order to avoid losing the house.

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