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Foreclosure after Chapter 7 Discharge

My husband and I filed for bankruptcy in September 08 after I lost my job. We did this to eliminate our unsecured debt and free up the cash to continue to make our house payments. Our attorney petitioned Citi Mortgage to reaffirm our mortgage. Our bk was discharged in December and I pulled our credit report to see that the mortgage account has been closed with a zero balance and was included in our discharge. Citi has told us that we can reaffirm IF the judge reopens the case and we were told by our attorney that he will not. We can continue to live here and make payments but they will not be reported. If we are essentially "renting" our home now, we can rent something much nicer for far less (we bought at the height of the bubble in 2007 and our house is not worth almost $50K less than our mortage is for). My question is this...if we walk away can the mortgage company report a foreclosure on a loan that was already discharged? Should we do a DIL - do we even have to do that since the mortgage was discharged. We were told by our attorney that we should act quickly if we are going to give up the house so it is seen as one hit. Any help would be greatly appreciated. Thanks.

jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

Though your bankruptcy was discharged, still the lender has the right to collect the mortgage dues from you. If you walkaway from the property, the lender will have the right to foreclose the property. The foreclosure will also badly affect your credit and will lower your credit score by 250 points.

You can definitely apply for a deed in lieu with the lender. You will have to write a hardship letter the lender. It will be lender's discretion whether he will accept the deed in lieu or not.

Thanks,

Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We filed for chapter 7 and our house was included. All the debt in the chapter 7 was discharged, my question is are no longer responsible for the propert now that it has been discharged, or are we still responsible until the bank forecloses on the propert and gives us notice to vacate.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Kimberli,

Though your bankruptcy has been discharged, the bank still holds the lien on the property. If you do not pay the debts, the lender will have the right to foreclose the property. This foreclosure will badly effect your credit score and credit report.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I filed for chapter 7 and my house and my rental property was included(did not reaffirm houses). All the debt in the chapter 7 was discharged. My rental property was foreclose on by the banks and the second house is in the process of being SOLD on a short sale(Banks approved). My question is will i be held resonsible for the the short sale home financially/ taxes because of how much the banks are losing on the short sale or is it part of filing chapter 7. Thanks

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Once your bankruptcy is discharged, you'll not be personally responsible for the payments. However, this short sale will definitely effect your credit score.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Can someone provide a definitive answer on this. Some say the mortgage discharge will be listed separately if the mortgage company forecloses after the discharge, others say it will be listed as part of the discharge. Which is it? Due mortgage companies purposely delay foreclosure until after the discharge, just to mess with your credit? It has been five months since I made a mortgage payment and they still have not started foreclosure proceedings.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

A query similar to yours has been answered in the given link:
http://www.mortgagefit.com/bankruptcy/discharge-reaffirmloan.html#97967

Please have a look at it. I hope it'll help you.

Sussane

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mntnmama's picture
mntnmama | Joined: June 2, 2009 06:19 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We recieved a Chpt 7 discharge in 07 and our mortgages report as included in bankruptcy our current lender and FHA underwritter have given the go ahead to look for a home. Our credit is up at 700 only 24 mo after discharge and no foreclosure is on report.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Did you live in the home after discharge? Did you reaffirm the debt? Did you sell the property or walk away, etc. When you say you have the go ahead, are you out of your house that was tied to the mo0rtgage in the discharge?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi mntnmama!

Welcome to forums!

As 2 years have passed since your [url=http://www.mortgagefit.com/bankruptcy/chapter7.html]chapter 7 bankruptcy[/url] has been discharged, you can definitely apply for a FHA loan. However, if you want to go for a conventional loan, you will have to wait for another 2 years.

Feel free to ask if you have further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

No they cannot report your foreclosure if you did not reaffirm!! That MUST be listed on your credit report as part of the bankruptcy by law. If they add anything to your credit report about foreclosure after your discharge debt, contact the credit bureau demanding removal. I would get a lawyer to get compensation for the damage they did to your credit.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

No matter what they do with the home after you did not reaffirm in your bankruptcy, cannot legally affect your credit.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I filed for bankruptcy 2/08 (as a result of a divorce 5 years before, trying to rebuild my career, and buying a house that was really more than I could afford). It took over year, but my BK was finally discharged this past March 3/09. My home was NOT reaffirmed with my BK. I am trying to decide now if it makes sense to try and work something out with the banks after the fact - or walk away from my home and rent. As the person noted above, I am upside down at least 50-80K and could actually find something nicer/bigger for the same monthly payments to rent. If what I just read above is correct.... the forclosure will not be an additional hit to my credit (over an above the chapter 7) - correct? Any clarification on this would be greatly appreciated! This is such a big decision...and I want to make the right one.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Kdecker, we did exactly what you are, and decided to walk away and rent something for a couple of years. Forclosure is not an additional hit on my credit. I also had 20 rental properties that I surrendered as well as my primary and none are additional hits. The person saying it lists as separate and will lower your score 250 points either doesn't know what they are talking about or has ulterior motives. I am telling you from experience!!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I just filed chapter 7 in Feb 09 I was told my discharge would be today. I havent rec'd anything letting me know this is the case. I would like to buy a car and a home, what are some good ways I can get my credit score ready for this and how long will it take? Also I attemped to get copies of my credit reports and none of the three companies will allow me to do so, is there a reason for this?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi D,

A query similar to yours has been answered in the given link:
http://www.mortgagefit.com/bankruptcy/ch7-buyhome.html#104045

Please take a look. I hope it'll help you.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I had a [url=http://www.mortgagefit.com/bankruptcy/chapter7.html]Chapter 7 bankruptcy[/url] which was discharged in May 09. None of the banks who own my properties have completed the foreclosure process on the houses. I am worried that they will delay the foreclosures to keep the home off their balance books. Not a big deal expect that I've heard that the city can still fine me for not upkeeping the places since my name would still be on the deeds. Should I attempt a Deed in Lieu to hurry the process along or will this hurt me with taxes or in some other way?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi JGold,

Your query has been answered in the given link:
http://www.mortgagefit.com/bankruptcy/foreclosure-dil.html

Please take a look at it. I hope it'll help you.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I FILED CHAPTER 7 AND I DIDNT INCLUDE MY HOUSE. NOW IM UNEMPLOYED AND CANT AFFORD IT ANY LONGER. MY CASE HAS BEEN DISCHARGED CAN I STILL INCLUDE MY HOUSE?

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi RISSA,

As your bankruptcy has already been discharged, you won't be able to include your house in it. You've mentioned that you are unemployed and won't be able to afford the property anymore. In that case, it would be better if you could apply for a deed in lieu foreclosure with your lender. This will help you in selling off the property and you won't be liable for the deficient amount as well.

Take care.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Our chapter 7 bankruptcy was discharged in Feb, 2009....two months later our camper and car were repo'ed. Later we received a check from the camper for refunded gap and term life insurance. We went to the dealer to see about getting that fro the car too..and was told GMAC closed it and took the money in April of 2009...after the discharge. Can they legally do this?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

You need to contact GMAC and resolve the issue. But it would be better if you could contact your bankruptcy attorney and speak with him regarding this issue.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'm in California. Chapter 7 discharged, but trustee selling an asset so our case is "open." I did not reaffirm mortgage on house; the crecit report shows the mortgage "included in bankruptcy."

BofA has not yet gotten around to foreclosing although they say they will. Once they have foreclosed, are you saying that this actual foreclosure will NOT be listed separately on the credit report ????

Can anyone cite any law regarding that, because BofA has been very difficult to work with (I was originally w/ Countrywide and BofA bought them.) I cannot get any real consistent answer and as I'm working on rebuilding credit, it would be very helpful to know how huge a hit my credit will take -- the BK is bad enough, but to top it off with a foreclosure in the near future is awful. And BofA is not rushing to foreclose for some odd reason.

Anybody know ????

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Marilyn,

Your query has been replied in the given page:
http://www.mortgagefit.com/bankruptcy/discharge-foreclosure.html

Please take a look at it. I hope it'll help you.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a similar problem. We filed for CH 7 Bk and discharged 11/2006. The house was included in the CH 7. No reaffirm. We left the house before the BK discharged. The house shows on the CB as "foreclosure, debt included in CH 7 BK" and has reported that way since 11/2006. For some reason, the Mortgage company updated the reporting, didn't change anything other than the report date to 05/2009. When we went through Automated Underwriting today, we got kicked a Approved-Referred because of late mortgage payments. The home has not been ours or our responsibility since 11/2006. Can they do this?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Kaysee,

Though your bankruptcy has been discharged, the lender still holds the lien on the property. You are required to pay off the delinquent amount to the lender. You have left the property but did you officially surrendered the property to the lender? If you surrender the property to the lender, he would sell it off at a foreclosure auction. Once the property is sold off, then you won't be liable for any other dues. I guess, the property has not be sold and it's still showing in your name. As a result, the credit report shows that your are delinquent on your mortgage payments.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

hi, we had a chapter 7 discharge in april, the bank is now foreclosing on the house at a higher amount than the discharge. Are we responsible for the difference in the amount?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

Welcome to forums!

As the mortgage was discharged in Chapter 7, you are not personally liable for it. If the lender forecloses the property, then you won't have to pay the deficient amount.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my husband and I filed chapter 13 in 06 and converted to a chapter 7 in 07 we included our mortgage in both 13 and 7 and walked away from the house. We were dicharged in March of 08 and the mortgage company proceeded with forclosure in may of 08 and sold the house in June of 08. Now our credit says forclosure and we cannot get a mortgage? Do we have the right to fight this?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi sstarnes!

Welcome to forums!

I do not think you have much ground to fight. Though you walked away from the property and got your bankruptcy discharged, the lender was still holding the lien on the property. Thus, he foreclosed the property to recover his dues. This foreclosure would be definitely mentioned in your credit report and will also lower your credit score. However, you won't have to pay the deficient amount resulting from the sale. Thus, you're unable to get a mortgage right now. You'll have to wait for 3-4 years after a foreclosure to get a new mortgage.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

we filed for bankruptcy in 2008 and discharge of debts was in april,2009. we cannot afford to keep our house. the mortgage lenders were on the discharge debts list. should be call the lenders and let them know we are vacating the property

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi pepper!

Welcome to forums!

You can inform the lender that you will not be able to pay the mortgage dues henceforth and thus you are surrendering the property. The lender will foreclose the property and recover his dues and you won't be responsible for the deficient balance amount.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Are you sure they report the foreclosure on your credit report? If they do cant you get it removed legally?

Thanks
Scott

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Our Bk was discharged in 11/09, this month I was contacted to do a short sale on my home since I am still on title. The short sale is approved! I have a letter stating from lender that they will not go after me for and more monies anfd that the acct is settled. My question is can ANYONE come after me for anything since this debt was already included in the bk? I know i will get a 1099..but is that it. I'm I opening a can of worms Im I really ok to do this?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

our bankruptcy was discharged in 11/09 we have a first and [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] we reaffirmed the first mortgage and did not with the second mortgage the second mortgage holds a lien on the property. we have not made a payment to our second mortgage and they are threating to foreclose on our house. can they do that if we are still making payments on our first mortgage?

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Help,

As the mortgage was included in bankruptcy, the lender will not be able to come after you for the deficient balance after a short sale. Moreover, the lender has given it to you in writing that they won't sue you for the balance amount so you shouldn't worry about it.

Hi gmeyer,

Your query has been replied to in the given page:
http://www.mortgagefit.com/inprocess/about34994.html#151068

Take a look at it. Hope it helps you.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I filed for chapter 7 and was granted full discharge in oct 2008. my property, both 1 &2 lenders loans included. I surrendered the property in the bankruptcy at that time. The property deed and loans are still in my name, as they (GMAC) have not forclosed or even set a date for auction as of today!

My question relate to this..................
I have a motivated/interested buyer............GMAC is willing to negotiate with them to make a short sale of the property vs. forclosure..........But they wont do it unless I submit a FULL short sale packet to them, complete with hardship letter AND the also want to know all of my current financial, checking and tax info included. As i have already surrendered said property and been discharged from any financial responsibility, will giving them all my new info and financials ( we have since moved 3500 miles and had to relocate to another state to find jobs and get reestablished) make me somehow responsible again for any or all of the debt relating to this possible transaction???? Is ther some form of hidden reaffirmation responsibilities hidden in theese short sale packets they want???

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Tenli,

Your query has been replied to in the given page:
http://www.mortgagefit.com/inprocess/about35162.html#151611

Take a look at it. Hope it helps you.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

This is a wonderful forum for people who have questions about foreclosures after bankruptcy. I had a [url=http://www.mortgagefit.com/bankruptcy/chapter7.html]Chapter 7 bankruptcy[/url] in 2003 and my mortgage was discharged, although I still made full payments until September of this year. I was worried that my foreclosure was going to affect my credit report and I asked GMAC about this. The following is from an email they sent me:

"In response to your inquiry, GMAC Mortgage will continue to report to the credit bureaus in the same manner that all other loans are reported. This reporting will have no impact on your credit report (positive or negative) because the bureaus no longer acknowledge the debt. If the you do not pay the debt as stated in the Mortgage/Deed of Trust, foreclosure proceedings will occur."

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We filed bankruptcy a year ago and was fully discharged. Both mortgage creditors were informed (we have two houses). That time, we can keep both. Now with a bad renter, even with a loan modification, we can only keep one. What will happen if I foreclosed one of them? Are we still liable for deficiency judgement?

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Robby,

If you filed Chapter 7 and reaffirmed your debts, you would be liable for paying the deficient balance if the lender forecloses the property.

Take care.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks Sara,

I don't remember and I'm positive that we reaffirmed those mortgage debts. Although as of this time, they (mortgage companies) hasn't start any foreclosure proceedings. Is it because we're paying on time? At that time, we still can afford to keep both houses, having a good renter. Now , she lost her job and they are 3 months behind. Their rent goes to one of the mortgages, and so am I. Now, if they forecloses the house, will there be taxes I have to pay?

Thanks,

Robby

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Robby!

Welcome to forums!

If you've reaffirmed the debt and paying the dues on time, the lender will never foreclose the property. Rather your payments would be reported to the credit bureau which would have a positive effect on your credit report. As you are personally liable for the loan, the lender will be able to claim the deficient amount from you. If the lender forgives the debt, then you may have to pay taxes as it would be considered your income by the IRS. However, depending upon the Mortgage Debt Relief Act, you may not have to pay the taxes.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Sussane,

I have a same different situation with Robby. Only difference is we never reaffirmed the 2 mortgages. Now we're thinking of foreclosing one. Do we have to pay any deficiency judgement and taxes in the end?

Thanks,

Lee B

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Lee,

As you haven't reaffirmed your mortgage with your lender, you are not personally liable for the loan. The lender will be able to foreclose the property but he will not be able to sue you for the deficient balance resulting from the sale.

Take care.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We reaffirmed on our house in a ch 7 bankruptcy and now we can't pay it. It states on our credit report "discharged through ch7). Our bankruptcy has been discharged. If we do a short sale or foreclosure will we be responsible for the unpaid balance?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Lisa,

As you had reaffirmed the mortgage dues, you would be responsible for paying the deficient balance resulting from the sale of the property though your bankruptcy has been discharged.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband and I filed for [url=http://www.mortgagefit.com/bankruptcy/chapter7.html]Chapter 7 bankruptcy[/url] in 2008. It has since been discharged. We did not reaffirm our mortgage, however continued to make our payments. Unfortunately, we are no longer able to afford our payments, trying to clearly understand if this will affect my credit. Currently, our credit reflects the mortgage as being included in the Chapter 7 with a zero balance owed.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi kidz!

Welcome to forums!

If you do not make the payments on time, the lender will foreclosure the property which will have a negative affect on your credit report. Your credit score would go down by 250 points.

Feel free to ask if you've further queries.

Sussane

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

They can't come after you if the debt was discharged. They can't report debt as included in Bankruptcy and then foreclosure- only IIB. Reporting as foreclosed after is violation of bankruptcy injunction and discharge order.

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