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Life after bankruptcy discharge - worried about keeping home...We filed bankruptcy in late 2005. Discharge was in 2006. Right before the filing of the bankruptcy, we re-financed our home mortgage to an interest-only 5-1 arm so that we could afford the mortgage payment. (at that time, husband was unemployed).

Now, 5 yrs is getting close. Home value is below the mortgage loan. When looking at credit, the home mortgage was discharged. If we get to the point where we can't pay the mortgage (after the 5 yrs are up) how does the process work, since it's already discharged? Still goes to foreclosure? Is that yet another black mark on our credit, even though it's already been marked negatively with the bankruptcy? And the home loan is listed as a negative mark being discharged. Did trying to keep our home at the time of the bankruptcy end up being a mistake and, ultimately being a second negative if we can't re-finance or sell the house or make the house payments after the bankruptcy, but 5 yrs later?

Very confused on how the situation stands and what our options are in the future...

House very hard to sell. right before bankruptcy, we had it on market for about one yr. it is a two story in a town tin Nevada hat seems to draw retirees. They don't even want to look at 2 story homes.

Any suggestions would be greatly appreciated. Don't know where to turn, and getting very worried.

smithsussane · Posted: Wed Feb 18, 2009 8:04 pm Post subject:

Hi rainney!

Welcome to forums!

Did you reaffirm the mortgage after your bankruptcy was discharged? If you had reaffirmed it, then the lender may foreclose the property is you stop paying the mortgage. As far as I know, once the bankruptcy is discharged, you are not personally liable to pay off the debts. But if you have reaffirmed the debts and if you are paying it, then it will have a positive effect on your credit report.

I think you should speak to your lender about refinancing the mortgage and check out what he has to say in this regard.

Feel free to ask if you have further queries.

Sussane

Guest

No, I don't think we ever reaffirmed. That would be something I'd know about, right? I only know that if we continued to make our mortgage payments on time each month, then we could still live in the house (after it was discharged in a ch 7 bankruptcy.)

What are our options? We have good credit score of 718 and really need to think about downsizing the home we live in and the amount of mortgage balance. Can we purchase a much lower home now and then walk away from the discharged home? if we did that, will that foreclosure hurt our credit? or maybe no hurt our credit because it was already discharged?

Sorry, still very confused about all of this....

jameshogg · Posted: Thu Feb 19, 2009 10:18 pm Post subject:

Hi rainney,

As you did not refinance the property, you are not personally liable to pay the dues to the lender. As your bankruptcy was discharged in 2006, you will be able to buy a new home provided if you have a good credit score.

If you walkaway from the property and if the lender forecloses it, it will definitely affect your credit and lower your credit score by 250 points.

Thanks

Guest

I filed Chapter 7 in 2007 and included my two homes, one house was foreclosed on 4 months later. On my credit report anything that was discharged by the judge including my houses, show discharged in BK it also says the same to credit cards, Foreclosure is not even mentioned on my report. I was told that once discharged Creditors cannot make new changes to your credit report since it was discharged and your no longer liable for those debts. I lost my job and may go to Foreclose on my 2nd home almost 1.5 yrs after my discharge and I am covered by the BK since I did not reaffirm, if you do you become liable again. I was told by my lawyer that even loan modifications is not considered new debt so your covered under the BK if things dont work out. If you got a new note altogether then you got new debt and now its becomes liable. Check with a BK attorney to be safe but thats what my attorney told me. My credit score after 1.5 yrs after BK and 1 foreclose(Which by the way is not not mentioned on my credit report) is 675 and 704. If the house was foreclosed on by the bank after it was discharged there tying to collect a debt against the collateral not you personnally thats why I believe Foreclose is not on my report since the debt was already discharged. I have been looking into my options given the state of the economy and at the same time trying to preserve my new credit rating

Posted: Sun Apr 05, 2009 11:56 pm Post subject:

You have mentioned that you did not reaffirm your mortgage after Chapter 7 bankruptcy was discharged. Thus, you are not personally liable to pay off the dues. However, if you let the property foreclose, then your credit score will be effected. As the property is in your name, a foreclosure will effect your credit report and remain on it for 7 years.

Guest

So, basically, we should have let the home foreclose at the same time as the bankruptcy [4 yrs ago}?

We tried to keep it. but probably can't now. So, 4 yrs later, we have to start another negative mark on our credit????

I am so confused...Please advise
thanks

adonis · Posted: Mon Apr 06, 2009 11:30 pm Post subject:

Hi rainney,

It would have been better if you could have reaffirmed the debts and paid it off. Though your bankruptcy was discharged, the lender still holds the lien on the property. I hope you do not mind if I say that your lender was lenient enough to give you enough time to pay off the debts. Now if the lender forecloses the property, you credit report will be definitely effected. A foreclosure will reduce your score by 250 points and remain on your credit report for 7 years.

Guest

So, the lender should have foreclosed our mortgage right after the bankruptcy? I'm confused.

Yes, it's been several years now since the discharge. We have been making all of our regular mortgage payments, but they are interest-only payments and still the payment is about $1,700.00 per month. There was no way I could have paid off the over 300,000 in principle in those few years. We struggle to make the $1,700.00 each month as it is.

This is what I am afraid of: how, when the 5-1 ARM changes/converts next year in 2010, how can I make any more payment than what I already am doing?

Sorry if I sound so confused. Just trying to make the best decision under the circumstances...and I really don't know how to do that.

adonis · Posted: Wed Apr 08, 2009 12:35 am Post subject:

Hi rainney,

I can understand that it would be difficult for you to make payments if the arm adjusts and your payments increase. If you want to get rid of the property, then you can speak to the lender about a deed in lieu of foreclosure. It would be the lender's discretion whether he would accept it or not. However, you should remember that a deed in lieu will effect your credit report.

Guest

My advice to you is to list your house immediately for the minimum you can accept to pay off what you owe. Spend every spare moment you have doing inexpensive fix-ups like cleaning up your yard, fresh coats of paint, washing all your windows, etc. You shouldn't be mad at your mortgage lender for not foreclosing on the property 4 years ago because at that time you could have chosen to have included the property with your bankruptcy and lost it, or you could have chosen to exclude it since it was a secured debt, and hopefully keep the property. You chose the second and unfortunately it's not working out. I would just try to sell it right away before it is too late.

Guest

Filed BK to keep home in 2005. Paid plan in full in April, BUT way behind on mortgage. What's can be done to keep the house.

adonis · Posted: Sun Apr 26, 2009 11:30 pm Post subject:

Hi Sheryl,

Did you file Chapter 13 bankruptcy? In chapter 13 bankruptcy, the lender must have given you a payments plan which had helped you in paying off the mortgage dues in 3-5 years. If you have paid off that plan in full, then you won't have to worry about the mortgage.

Guest

So what happened?
I have the same problems as you, your best bet is to talk with your stupid lawyer who did the bankruptcy for you.
That is why you paid him so much money.........

Guest

I surrendered my townhouse when I filed BK. I just went to court last week. If I want to reaffirm my debt with my mortgage company, is that an option? I stopped making payments in May after proceeding to file BK. If this was an option, would they expect me to pay back payments? I hadn't planned on reaffirming after filing BK. As far as I know, foreclosure on my home hasn't been started.

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