Divorce, Bankruptcy, and Selling a House

[Anonymous]

My husband filed for bankruptcy and it was discharged 3 years ago. We are in the process of divorcing and I have moved out. He cannot make the mortgage payments on his own. The house is on the market but so far, no contracts. Our lender is Wells Fargo. I do not know if the loan was reaffirmed at the time of bankruptcy. If it was not, and he cannot make the mortgage payments, how will this affect his selling the house and keeping any equity?

[ezdriver]

---

@Anonymous wrote:

My husband filed for bankruptcy and it was discharged 3 years ago. We are in the process of divorcing and I have moved out. He cannot make the mortgage payments on his own. The house is on the market but so far, no contracts. Our lender is Wells Fargo. I do not know if the loan was reaffirmed at the time of bankruptcy. If it was not, and he cannot make the mortgage payments, how will this affect his selling the house and keeping any equity?

---

Was your name on the mortgage? If yes, then you are on the hook for the payment of that mortgage and it should be showing up on your credit report. If he did not reaffirm it, and you were not on it, then he is on the hook for the mortgage payments. Once some payments are missed, the mortgagor will start foreclosure proceedings. If he can sell it at breakeven or for a profit before the foreclosure process starts, then there won't be any issue with the mortgagor. If it becomes a short sale, then the mortgage will have to approve any offer. If ther is any equity in the house, it is better for the house to be sold so he should be dropping the price to a point where it will be sold. Remember, equity is determined only when the house is sold.

[Anonymous]

Thank you for the reply. It answered my questions. Now to get him to understand what you've stated! I'm off the hook; the house was pre-marriage and I was never added to the note or the deed. However, I'd like to see some equity since I've paid half the mortgage payments for the last 7 years.

Agreed, lower the price and sell before foreclosure proceedings begin. It should all work out just fine.

If he did NOT reaffirm, what happens if he misses a mortgage payment?

[StartingOver10]

Assuming he was discharged successfully in his Bk and he did not reaffirm the mortgage, then he can walk away from the house and the lender can not collect on the deficiency.  The lender would have to f/c.

If there is equity, it would be a good idea to sell the house to access the equity.

As to dividing up the equity in the property, that should have already been addressed in your Property Settlement Agreement (PSA) that you negotiated at the time of the divorce.