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Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

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Anonymous
Not applicable

Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

If someone can assist me that would be great. It will be two years since my Chapter 7 and I did not reaffirm my 1st and HELOC. I recently realized it shows up as zero on my credit report and there has been no history of me making my payments on time. I do not want to keep the house but I am almost at the two year point. What options do I have so that I dont take another hit on my credit report? Can I sell it for whatever price I can get? I do not want to short sale or keys for cash because I do not want another blemish on my credit report. I live in Illinois if that helps. Also the house is severely under water as far as what is owed. 

Message 1 of 8
7 REPLIES 7
Achase
Regular Contributor

Re: Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

you no longer own the house unless you pay it off in full. technically you are only renting. You can walk away at anytime with nothing negative happening to your credit. its reporting a zero balance because you are no longer liable for any balance since the mortgage was discharged.


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Message 2 of 8
ezdriver
Senior Contributor

Re: Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

Also, the lender has to foreclose in order for you to get your name off the deed. Until then, you will not be able to secure normal mortgage financing for a new purchase.

Message 3 of 8
StartingOver10
Moderator Emerita

Re: Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC


@Achase wrote:

you no longer own the house unless you pay it off in full. technically you are only renting. You can walk away at anytime with nothing negative happening to your credit. its reporting a zero balance because you are no longer liable for any balance since the mortgage was discharged.


^^^^This is NOT true.

 

The deed and the mortgage are two different things.  The OP still owns the property. The BK did not transfer the deed to another party at all. The deed is what conveys ownership.

 

You are right that the OP is no longer personally liable for the mortgage repayment because s/he successfully discharged the debt (not the deed) in bankruptcy.

 

OP, you can sell the house. If the property is not underwater, than you can keep the proceeds over and above the mortgage repayment and costs of sale.

 

However, if the mortgage is more than the value, you can either bring the difference in cash to closing to pay the mortgage off or you can do a short sale.  Having the short sale after your Bk won't show up on the credit report because the tradeline already reads IIB and zero balance like it is suppose to read.  What the short sale will accomplish is removing the mortgage lien from the property and transferring the deed to the new buyer. 

Message 4 of 8
Anonymous
Not applicable

Re: Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

Hi -- I am in a similar situation and need some advice.  We surrendered our home in Ch 7 BK in 2010.  The bank, at the time did not offer us any options and we were impacted by many factors.  We ultimately had to relocate many states away for work.  We have reestablished our credit.  As it was more than 3 years since our BK we were attempting to purchase a home, but unfortunately, the bank had foreclosed on the property late in 2013 and as it was an FHA, we could not get a loan. My credit report reflects both the BK and the FCL, even though the FCL was much later and I am not liable for the balance. Is there any help that you can offer?

Message 5 of 8
StartingOver10
Moderator Emerita

Re: Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

Where is that FCL notated on your report, under the public records section or is the mortgage tradeline showing FCL?  If it is the public records section, then yes, it is a public record and can be noted there.  Notations are hit or miss in the public records section.

 

However, if the lender changed your mortgage TL to read FCL that is a violation of the discharge injunction. You would need to contact a consumer attorney. If there is a violation of the discharge injunction the attorney fees would be paid by the lender that is violating the the injunction and there would be some money in it for you too. First you might want to contact your Bk attorney. He can send a letter to get them to correct the TL.

Message 6 of 8
Anonymous
Not applicable

Re: Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

Thank you for responding.  I do not have it under Public Records on any of the reports.  And only Experien lists it at all -- in the Comments it says Foreclosure Proceedings Started.  Note -- they started AFTER the BK filing.  As it is in the comments, do I still follow the same process by contacting the attorney?  My fear is that the other reports could be impacted and apparently they are correct.  Can I contact Experien and have this corrected.  This was what caused my loan to be denied.  It went all the way through and was denied nearly 3 days from close because of that comment on the one report.  We have made so much effort and worked so hard and to have our hopes of purchasing a home dashed over this comment is quite hard to deal with.

Message 7 of 8
StartingOver10
Moderator Emerita

Re: Bankruptcy Chapter 7 Did not Reaffirm 1st and HELOC

Yes, contact them directly yourself first. Who wrote the comment, the lender? If so, contact them in writing. Mention the violation of the discharge injunction. You will have to get higher up than a CSR though.

Message 8 of 8
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