Post Bankruptcy Questions

[Anonymous]

I am hoping that I can get some answers to questions, but am having a hard time finding someone to answer them...

In a nutshell my husband and I filed a Chp. 7 BK last year and they told us we would not be able to proceed because we made to much money etc.  In January of this year (2008) we got in the mail a letter letting us know that we had been discharged and that our Chp. 7 did go through...huge relief, but our attorney's never communicated with us that this was going to happen, and since then they continue not to answer questions that we have sooooooooo....

When we filed we inteded to keep our home that we own...circumstances have changed and we can not afford it anymore as payments keep going up etc.  When I called the second mortgage holder they said that we were not liable for that loan anymore because we had been discharged...so now we don't know if that was included in our BK and if the first was included in our BK because we never knew that we were going to be discharged.  Has this ever happened to anyone else?

[LindaLu]

If they say you are no longer liable that means it was included...My first and second mortgage were both included and even though they have a lien on the property they have told me the loan was discharged which means your credit report will show the mortgage as a zero balance but will show derogatory...You can make your payments and still keep the home but if you decided to just walk away from the house the bank will not try to collect that debt from you as it was discharged.

It will be however very hard to get another mortgage for at least 2 or 3 years..I tried to refinance as my payments are too high too and was turned down by one of the low end home financing companies because the bankruptcy really lowers your credit score..My discharge was last august..I am hanging on to my home by a thread..

If you do however want to try to keep your home call your mortgage company..Even though you filed bankruptcy they may still work out a payment plan or forebearance if you are behind..Ask for an interest rate reduction or just plain ask for a specialist that can review your loan situation and see if they are able to do anything at all to lower it so you can keep your home..

If you haven't already heard this before I will tell you that the bank doesn't want your house...I keep hearing that from attorneys, banks, etc...therefore they may help you out so they don't get stuck with it..

Good Luck to you..it is a long road out of bankruptcy but it is the best decison in the long run.

[Anonymous]

One thing I found out while going through bankruptcy was that if you have a second mortgage and you haven't enough equity to pay the second mortgage, the holder of that second mortgage may forgive the debt, in which case the wonderful IRS will ( this must be reported by the lien holder to the IRS ) claim that you earned that money, and therefore owe them taxes on it. There was a law passed during the last few days of Mr. Bush's ( W ) term that offers relief from this travesty.  If you spent the money from the second mortgage on improving your home, or can show that you were insolvent, or a combination had had. I believe that law is in effect until 2012.