Chapter 7 Debtor Did Not Reaffirm Mortgage

The 2nd cannot force YOU to sell. If there is equity (and even if there isn't) if the mortgage (1st or 2nd) is not being paid then the lender can foreclose. Both liens passed through the bk unaffected. The debt was discharged but the liens remain therefore, unless you pay the liens you can lose the home. Whether or not the lender will foreclose is something no one can answer since we do not have a crystal ball. Further, even if the lender does not foreclose, unless you get a lien release, if and when you do sell (or refi), both liens will have to be dealt with.

Des.

Once your bankruptcy is filed and mortgage is "discharged" no payments whether on time or late are updated on your credit report. We are currently going through this. Our mortgage didnt reaffirm and our lawyer did not explain it thoroughly which I am kind of glad he didnt. When I found that our mortgage was listed as discharged on our credit report I went ballistic. I was told by the credit bureau that once its reported discharged there is not activity and will not be updated.

It is true that unless you reaffirm your mortgage, your lender won't be ready to report your payments to the credit bureaus. This is because after a discharge, you don't remain personally liable for the payments so the lender also does not remain liable for reporting it. Once you reaffirm the mortgage, you become personally liable for paying off the debts. Thus, the lender also becomes liable to report the payments to the credit bureaus.

Does that mean if you begin to fall behind on payments (maybe just 1 month) the lender can begin forclosure or anytime they feel like it? This is after a discharge and have not reaffirmed.

If you do not make payments (regardless of the discharge) the lender can and will take back ITS property therefore eventually it will foreclose. It will follow State law in such matters. And yes, while it probably won't happen, being behind 1 payment gives the lender the right to begin the process of taking back ITS property.

Des.

Ok, I get this question. When you first file for BK (chapter 7), you check a box stating if you want to include the home in your bankruptcy. No matter what you check, the bank will still send a reaffirmation agreement to you prior to discharge. At first, I checked that no, I didn't want to include the home in the BK. This was on the advice of my atty, because sometimes banks will send better terms in a reaffirmation agreement to keep the debtor in the house. Anyhow, when I got the reaffirmation agreement the terms were still crap, so I didn't sign it. Again, you get the agreement in the mail prior to your discharge and if you still want to keep your house out of the BK, you have to sign and return it before discharge.
Once your BK is discharged, if you did not sign a reaffirmation agreement, you are no longer legally responsible for the debt and the mortgage was discharged as well, regardless of what box you checked when you first filed. However, you still do own the home and you name cannot be removed from the paperwork until the bank forecloses to take ownership. If you are making payments still, they won't do this, as it costs them money. So, if they are accepting your payments and not threatening foreclosure...and you never signed a reaffirmation agreement, you are sitting pretty. You are still the home owner and responsible for taxes, HOA fees, etc.. but the bank cannot come after you if you stop making mortgage payments. They also should not report it to the credit bureaus if you stop paying now, or report it as a foreclosure, because the debt was discharged with your bankruptcy.

Also, many people have asked about if a foreclosure will show up on a credit report when a mortgage was discharged in Chapter 7. My home was foreclosed upon, after the mortgage was discharged through chapter 7. 2 of the bureaus only listed 'discharged in chapter 7' on my credit report, not anything about the foreclosure that ensued. One bureau did put it on there, so I disputed it based upon the fact that the debt was discharged in chapter 7, prior to the foreclosure, therefore I was not legally responsible for the debt when the foreclosure took place. I also stated that by putting both on the report, they were unjustly penalizing me a second time, for the same debt. They agreed and removed it.

No need to reply, it's a test post..

im in the same boat with my mortgage. but its my idiot lawyers fault. i had requested numerous times about a month before my discharge to get the reaff papers. well long story short they sent them in illegible THE DAY BEFORE my discharge. by the time i knew about it it was too late. so thanks to my super slack lawyer, me making on time payments to my house is all for not.