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exit72 · Posted: Mon Mar 31, 2008 10:52 pm

I just received my discharge letter from the court. Included in chpt 7 bk: secured debt home 1st mortgage $415K, 2nd mortgage $95K, 3rd mortgage $30K, car loan $15K, unsecured debt cc and personal loans $40K. My wife and I total income $95K year. On our mortage, we owed more than the value of our home. My attorney told me that I have no more debt. I still don't understand because I'm still paying my home. I called my lenders, why? and they told me that if I stop sending my payments, they can take my house. The same as my car. Eventhough my debt are discharged, we are still having difficulty paying our mortgage. I don't know If can be qualified for mortgage modification or any help to reduce my monthly payment. If there's anybody here that in the same situation, please let me know how you did it.

Posted: Mon Mar 31, 2008 11:16 pm

Hi exit72,

I dont get u.....u have already received your discharge letter....then why do u need to pay to your lenders....the debt is already discharged rite?

exit72 · Posted: Tue Apr 01, 2008 5:46 am

They will take my home if don't pay them. I'm going to them a call to verify, because it doesn't look right to me.

Posted: Tue Apr 01, 2008 4:43 pm

did your lawyer reafferm your mortgage and your car? If they did, then that is why you still need to pay it. You need to ask your lawyer about that.

Posted: Tue Apr 01, 2008 7:59 pm

This is something your BK attorney really should have explained all this to you, so forgive me for being flippant when I say you don't get a free home and car by going bankrupt.

Debts ($) are discharged in a BK, but any underlying security interest is not. Because the security interest remains intact throughout the bankruptcy, you only have three choices when you include a secured creditor in your BK: 1) redeem the collateral (by paying the loan in full); 2) reaffirm the debt (by reinstating the note and making your payments); or 3) surrender the collateral (by giving the property back to the creditor). If you did not do any of those three things by the time your case was discharged ("stay of collection" ends when BK case is closed), then the creditor is entitled to repossess/foreclose on the property.

Posted: Tue Apr 01, 2008 8:34 pm

When you get your discharge the secured debts that were liste in you petition (home, cars) are not discharged and you must keep on paying them if you default they will foreclose your home and repossess your car. Your lawyer should have gone over your petition before you signed the paperwork

exit72 · Posted: Tue Apr 01, 2008 10:34 pm

thanks for your comments. My lawyer didn't reaffirm my home, car. He asked me if I want to keep my house, and I said yes. To DebtCruncher: I didn't do all those 3 you mentioned. My lawyer told me if don't pay my lender, they can foreclose my home, but it won't show up as foreclose. Bankruptcy will override it.

Posted: Wed Apr 02, 2008 5:48 am

You don't have to do all three, it's really one or the other. I personally think your BK attorney gave you bad advice because the BK Reform Act of 2005 specifically prohibits "ride-throughs" which is basically what your attorney told you to do -- ride it out and keep making the payments without reaffirming.

Posted: Wed Apr 02, 2008 1:25 pm

If you were listing the home and auto's in Chapter 7 you would have had to vacate the property. They will not discharge your mortgage obligations and allow you to continue living in the home. You will need to reafirm the mortgage debt. When we filed Chapter 7 after a divorce my ex husband kept the home and it was not included in the bankruptcy filing. He continued to make the payments throughout the bankruptcy process.

exit72 · Posted: Sat Apr 19, 2008 10:34 pm

Hello again, I know my home is worth less than what I owed now. Would my first mortgage lender allow them (2nd and 3rd mortage) to forclose my home if I stop my payment on my 2nd and 3rd mortgage? I know that if stop my payment on three them only my first lender can take my home, which is also negative. 2nd and 3rd will get nothing. I don't how it works, but if anybody here knows, pls. let me know. I really appreciate it. thanks.

Posted: Sun Apr 20, 2008 5:39 am

Only the first position lienholder can foreclose. However, a second position mortgage can buy out (pay off) the first; then they become a first position and can foreclose that way. If your third wanted to foreclose, they would have to buy out the first two.

If the first does foreclose, the 2nd and 3rd won't necessarily get 'nothing'. The first will sell the home and payoff the account -- if there's any proceeds left, it will be passed down the line until gone. The third may get nothing.

But, because the overlying debt was discharged in the bankruptcy, they can't come after you for any remaining balance.

exit72 · Posted: Sun Apr 20, 2008 10:38 pm

thanks for the info. But what why would they pay off the first. They would have more loses.

Posted: Mon Apr 21, 2008 4:41 am

You're right, it wouldn't make sense for the 2nd or 3rd to buy it out when you're upside down in it - it would just create more losses for them.

Where they might try to do something like that is if your home had enough value to pay everyone off. For example if your home was worth $200K, you had a 1st of $100k, a 2nd of $50k and a third of $25k -- then the 3rd could fork over $150k to become a first position and then the value is there for them to recoup all their losses.

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