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May 2011After bankruptcy: My house payments don’t show on my credit report.
Posted by Robert Weed / in Virginia Bankruptcy / 538 comments
One reason to file bankruptcy is to get back to good credit. Once your credit has gone bad, bankruptcy, for most people, is the fastest way to fix it. I encourage all my clients to rebuild your credit after bankruptcy.
So you may be disappointed, and even angry, about how the credit bureaus handle your mortgage payments. Making your after-bankruptcy mortgage payments on time doesn’t help your credit score one bit. Those payments don’t show at all.
Instead your mortgage will just show “included in bankruptcy.”
“Hold on” people say, “I didn’t include my mortgage.”
Actually you did. When you file bankruptcy, you “include” everything. That’s the law. You pick and chose what debts you want to keep paying–keep paying the house if you want to live there; keep paying the car if you need it to get to work. But you don’t pick and chose what debts are covered.
(The bankruptcy covers–discharges–your credit cards, medical bills, debt collectors, bank loans, car payments, mortgages. It doesn’t discharge student loans, most taxes, child support or alimony.)
Making your house payment on time after bankruptcy, gives you a place to live. But it does not help your credit score.
Even if you are keeping the house, the discharge is an important benefit to you. If real estate values don’t recover–or drop again–and you can’t sell the house when you are ready to move, you are still protected. You can move out and not owe them anything. (Remember though to pay your home owners association!) Also, after bankruptcy late payments don’t count against your after bankruptcy credit.
If you complain to the mortgage company about your credit report, they will tell you that “you should have reaffirmed your mortgage.” Reaffirming takes the house out of the bankruptcy.
Is reaffirming a benefit to you? Maybe you get back to good credit a month or two sooner than you would just be getting and paying new credit cards. The disadvantage? If you can’t pay or can’t sell the house, you get garnished for up to eight years.
That disadvantage is lots bigger than the benefit.
If the credit bureaus worked for you and me, rather than the creditors, we’d set it up something like this. The credit bureaus would report your house payments as long as you are current, but they come off if you get behind. Sorry, but we don’t have that choice.
After bankruptcy mortgage payments–current or late–don’t show on your credit. That’s just the way it is.
(The same rule applies on car payments.)
PS What the Bankruptcy Judge Here Thinks
In early 2020, I was in court and saw a lawyer asking the judge to approve reaffirmation on a mortgage. The judge, who is usually very nice, chewed out the lawyer for even suggesting it. “I will never approve a mortgage reaffirmation,” she said. “Don’t ask.”
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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.
Laura M. Jones
What happens when you do a loan modification? Is that a reaffirmation of your mortgage loan? Just curious.
Thanks,
Laura M. Jones
Robert Weed
Having a loan mod doesn’t change what I said. A loan mod is NOT a reaffirmation. That means payments still do NOT show on your credit report–that’s bad. And also that you are not trapped. That’s good. If you need to move and can’t sell (or if you can’t afford the payments when your loan mod steps up), you can move out and not owe them any money.
Jarrod Underwood
I don’t understand? My wife and I fell behind over the last 12 years just trying to keep our home which we should have never been giving a loan for literally closed in October 2008. We were unaware at the time of the housing market all but crashed at that point. We payed 130,000 for a house that wasn’t even barely worth 90,000. We immediately fell behind and our fixed rate which we thought would keep our home at 875 a month instantly went to 1000. Countrywide was our lender which I never could figure out why cause they had gone belly up by then. We made our first handful of payments to Pulaski who we thought was our lender. 3 months later we were told to start paying Countrywide/Bank of America. Pulaski talked us into refinancing 6 months later cause we were behind from the get go. We were in our 20’s with 2 babies 3 and 1 so we did. Again we were told to pat them our first payment only this time our paperwork was different and they immediately sold our mortgage to greentree then on and on and after emptying my entire retirement to save the house over the years never getting out of an upside down mortgage which it was from the very start. I filed CH 13 2 years ago in hopes of getting rid of all the debt we had before the house hoping that would help but being a bricklayer and getting older I was forced to get out anyway an pursue another path. It has been a struggle for 12 years at times almost ending my marriage I could not even begin to tell you. We have still some how managed to hold onto it falling behind and some how getting help and luck able to catch back up to fall back behind. I could almost cry typing this. Here I am having to start all over again possibly going back to school not really knowing what to do and my bankruptcy is up in a couple months after wanting to do CH 7 initially but talked into 13 cause I withdrew the rest of my pension a year earlier to save the house again and the lawyer said I had to include that cause it was combined with our wages and I wouldn’t get it. So I have been paying 250 for 3 years and I have a feeling that when I’m done they will wind up foreclosing anyway. We need help, advice anything we can get at this point. We will come up with some money for time if you so happen to read this which Im sure you will probably not. My email address is [email protected]. I live in Arnold MO if their is any direction you can point us in It would be forever appreciated. Thank you. Please read this. I would at least like to know if we are just screwed or something.
Robert Weed
Jarrod:
Based on what you said, I don’t have the whole picture. I’m not sure why you ended up in Chapter 13. I hate it when people take money out of their retirement to pay their debts. Other than that, I don’t know enough to tell you anything.
eddie
is this law the same for the state of georgia??
Robert Weed
Yes.
Mari
I was unemployed for a year when I filed Ch 7 last year. I am still living in my home in Las Vegas. I have made all of the mortgage payments on time. When I bought the home I had a co-signer, Laura (she lives out of state and has not contributed any amount towards payments). As you stated, the payments don’t show on my credit report, but they are still showing on my co-signer’s. We both want Laura’s name off and my name back on the loan. I would be willing to sign a new loan agreement but would like to be able to also modify the loan in the process. Background on me, literally almost two weeks after I filed, I found a wonderful, well paying job. Laura, is a disabled vet who is on permanent disability. Can an attorney help me with this? How do I do this? Thank you.
Robert Weed
I just don’t see them letting her off. Can’t think of any reason why they would. Since she’s a disabled veteran it seems very likely that she’d be eligible for bankruptcy if they came after her, but I know you don’t want her to go through that trouble.
But, other than her filing bankruptcy, I can’t see any reason they would take her off the loan. When your credit is good enough, and values recover, you could refi the house just in your name. Your credit MIGHT be good enough a couple years after the bankruptcy.
From what I read in the paper, values aren’t recovering in Vegas any time soon.
cathy laud
man u have so much good information for people …
Mari
Thank you for your response. We both spoke to the bank and they know about the bankruptcy and said I just needed to fill out paperwork to change the loan to my name, but that just sounded like a reaffirmation with a modification. They sent me a packet that I filled out but they sent it back because they said I needed to atttach a sales contract? My bankruptcy filing was in April 2010 and my credit score is currently 644. Would I refi directly with the bank or because of the bankruptcy, do I need to go through an attorney?
Jennifer
Our bankruptcy was discharged in 2008. We did not reaffirm our house. We sold it in a short sale in March of 2011. One credit bureau is showing us having late payments as late as February of 2011. I thought that if you did not reaffirm the house they can’t put late payments on your credit. We are trying to get an FHA loan and they will not do it because it shows us being late on our mortgage. Is this legal? How would we fix it?
Robert Weed
You need to dispute it with that credit bureau. Which one is it? also, what state are you in?
Jennifer
We are in the state of Florida and have attempted to have it removed. Experian is the only bureau that is showing the mortgage as delinquent. The other 2 are showing it as included in bankruptcy. We are not able to get a mortgage until experian clears this up.
Jennifer
Also, can we sue experian if they do not remove it?
Justin Frakes
Mr. Weed,
My wife and I filed for bankruptcy in May 2008 and we were discharged in July 2008. We owned a home and of course it was
included. Our attorney at the time told us to depart the property as soon as possible. After several months of renting my wife and
I decided that we really missed our home so we contacted the mortgage company to see if we could work something out. In the
end we were able to do a loan modification cutting our interest rate from 7% to 5% and all late fees and missed payments were
tacked on to the end of the loan making us owe 159K from 142K. We are possibly wanting to relocate for jobs and are aware
we are very upside down and will not be able to sell the house for what is owed on it, especially since the same floor plan down
the street is on the market for 131K. With our modification there was a page attached, a Bankruptcy Modification Disclosure Rider
and on the last paragraph it basically says the “Instrument” does not affect the Debtors personal liability. Since moving back into
the house none of our payments have been reflected on our credit report and on our monthly statements from the mortgage
company it states that this is not an attempt to collect a debt. I assume this is because we did NOT reaffirm but just did a
modification. So the question is, if we decided to walk away from the house and let it go through the foreclosure process
and stay there until we are forced out can the mortgage company sue us for the difference? Will the foreclosure go against
our credit even though the house was included in our discharge? After reading several things on the internet it doesn’t seem
like they can do anything to us because of 11 USC 524, except get their property back. I just want to know about the state of
Kentucky, does this apply. Again we did not reaffirm on the debt, but only did a modification and our loan is the same original
loan when we first purchased the house. There are no new liens on the house. Any information would be greatly appreciated.
Robert Weed
You need a good bankruptcy lawyer to help you sort this out. Since you live in Falls Church, I’d suggest you come see me. Call 703-335-7793 and make an appointment.
Fe
Why can’t I make my house payment at a Chase bank branch. I either have to mail it (isn’t a good idea when payday lands late and you have to choose bankruptcy payment or house payment) or pay $20 to pay it on the phone. Can’t pay online or on autopay anymore.
Robert Weed
I have to say I’m surprised the second hasn’t sued you yet. Usually they do within about 18 months of your foreclosure. You say they are hitting your credit every month, so that’s keeping you from ever getting back to really good credit.
What should you do now? If you had filed bankruptcy around the time of the foreclosure, you could soon have good enough credit to buy a house–three years after the foreclosure; two years after the bankruptcy discharge.
Now that you’ve waited this long (why?), I’m not sure what you should do. If they haven’t sued you in five years, then (in Virginia anyway) the statute of limitations would expire, and they’d be too late.
Maybe you are not in Virginia. If you are in a non-recourse state, then a purchase money second mortgage can’t sue you either. In that case, hitting your credit report would be wrong. You could dispute it, and if that didn’t get it stopped, sue them and the credit bureaus for a Fair Credit Reporting violation. That would get it off your credit report. And maybe get you a little money.
Mitch
I am in AZ but came across your website. I have a horrible loan through Chase who inherited it. Our Ch 7 BK was discharged 11-2009. We decided to stop paying on our loan since we are $150K upside down in the house and the loan is not what we were told it was (is a negative am, interest only that hit a 115% cap after 4 years). Our payment increased $1K because of the cap, then when we asked for a loan modification and they INCREASED our payment because “your income shows you can afford it”. They also offered us a wonderful 7.75% fixed for 30 years. Nice of them, huh? So we decided to not accept the loan mod and let them take the loss instead of us.
We should be able to qualify for a loan in November (2 yrs after discharge). We have gotten a credit card and a secured loan and have a student loan that we have always remained current on, which should be helping our credit.
Do you know if not making our house payment is going to affect our getting a new loan? It doesn’t show on our credit report, BUT I was told that the new mortgage company will request proof of 24 months payments, which we won’t have.
Also, when I talked to my mortgage company, they knew how much I owed on my car loan (which was included in the bk and shouldn’t show on my credit report). How would they know that if it shouldn’t be on my credit? Do they have access to a different report?
Ida
Hi I live in Las Vegas and filed a chapter 7 on Feb 2010 and included the house. It was discharged on May 2010. The bank kept sending me letters to modify my loan so I sent all the info they requested. It took them about a year to send me an approval letter for a trial period. I sent the 1st payment in June, but my job is relocating me out of state. Since Im moving out of state, do I need to keep sending the payment? Or can I just move? Or do I have to do a short sale? And if I do a short sale, is that going to go against my post BK credit? I would like to buy a home when I relocate, so when can I buy again? Thanks
Robert Weed
The bankruptcy still protects you. You can move out and not owe them anything. Legally the foreclosure cannot show on your credit report–it will/should still show bankruptcy in 2010.
However, you cannot get approved for a government guaranteed mortgage (about the only kind there is) until three years after the house is actually out of your name. And it could take them months to actually foreclose you, so the house is out of your name.
If you go for a shortsale, that might be faster.
crystal
My husband and I filed chapter 7 in October of 09. The mortgage shows it is in bankruptcy. Our lawyer says he filed for the reaffirmation, but our mortgage company says we did not. What I would like to know is since we have never missed a payment and have always been on time, do we still legally own the home or does the bank now own it? Can they come take our home? Not sure if we can legally sell the home or not. We have put alot of money into remodeling in the past 2 years and just checked our credit report which shows no payments since October of 09. This hurts our credit. Should we walk away from it would it hurt us more? The mortgage company says it’s out of their hands on reaffirming the loan because it’s been 2 years and we have already been discharged. Do we have a lawsuit against them because our papers say the home was exempt from bankruptcy? Or could we maybe buy back the house at a cheaper rate? Like I said we have never been late. I just need to know where we go from here?
Robert Weed
First, you need to look at the court docket–on the court’s website. It will show whether a reaffirmation was filed or not. I assume the answer is no, because reaffirming a mortgage is usually a bad idea, and in a lot of courts the judges won’t allow it.
If there was no reaffirmation, you gained important protections, and you lost almost no rights.
The only thing you lost is that your payment history does not show on your credit report. What you gained is this: if you cannot sell the house for what you owe on it, you can walk away and owe them nothing. The bankruptcy still protects you from any deficiency. (As long as you are the owner–and that could be a long time in some states–you still have to pay the association, if you have one. And you are responsible to the county for code violation, like making sure the grass is cut.)
The rest stays the same. You “still legally own the house.” As long as you make the payments, you can keep the house. If you can sell it for more than you owe on it, that money is yours.
That’s a good deal.
Nannette
We just recently found out that we did not reaffirm our mortgage, My Husband recently lost his Job, and we both have been battling so serious illness’s. We have been considering trying to reaffirm, to improve our credit score so we can refinance, but after reading some of your advice we fill we might be better off leaving well enough alone. Refinancing at this point may not help us as much as knowing we will owe nothing if we walk away. We have been making payments, however we are behind and receiving threatening letters everyday. Bank of America has been unwilling to do a modification, however they just found out we did not reaffirm will this make a difference in our negotiation’s with them.? Or will they just decide to go thru with foreclosure knowing they will loose money? I don’t want to loose my home its the only thing we have to leave our Daughter, but the stress is killing us. Any suggestions on how to handle this situation would be greatly appreciated.
Robert Weed
There are many reasons why you can’t get a loan mod. It sounds like you couldn’t get a mod when your husband was working–because you weren’t behind. And maybe because you were making too much. Now, with him out of work, you may not be making enough.
While your husband is looking for work, live for free for as long as you can. I don’t know what state you are in–and Virginia is the only state I know well. But it looks to me like you want to continue to apply for a loan mod and live for free for as long as you can. In many states now it takes a year for them to foreclose you.
You say you want to leave the house to your daughter. But if you owe more than its worth, what kind of legacy is that? I’d like to know more about you, before giving advice. But with medical issues, it sounds like you need to live in that house for as long as you can, keep trying for a mod, and then find a cheaper place to live.
If your husband gets work again, maybe you can get a mod that enables you to keep the house at a payment you can afford.
Sheila
I’m making an appt to see you but have two questions about my mortgage. I have a loan modification but due to bad decisions, (helping other family members), I have fallen 8 months behind. Bank of America has set up a repayment plan, I fell behind on that but am now back on track. If I file bankruptcy will I be able to keep my house? I have no equity, my loan is right at or just below the value or do you think the bank will foreclose regardless of a bankruptcy OR me keeping up with the repayment plan to get back on track? I haven’t gotten anything from them…yet but just talked to them last week to let them know why I was behind and when I could make my next payment (the end of this month).
Robert Weed
that’s why we meet in person. so we can work out the best strategy to get you where you are trying to go.
Nannette
I spoke with BOA Home retention center about an Hr ago, went over our financial situation once again, they are sending us forms to fill out to file a forbearance, I explained that we had just learned that a reaffirmation was not done at the time of the bankruptcy and that sense we were having such a problem with getting any type of home mod, we did not see the use in reaffirming the loan. I will be looking closely at the doc. they send to be sure that a reaffirmation is not a part of the forbearance process. They of course encourage us to continue to make what payments we can, but will not except partial payments. Should I Make full payments when I’m able to during this negation process?? I was also told that as long as we are attempting to negotiate they would not start the foreclosure process is this true? I live in the state of Virginia, I am 47 yrs old and was diagnosed with heart disease 2 yrs ago from a bacterial infection that’s when all this began. First we got behind on our payments, we tried to work something out with BOA at that time to no avail. I changed Jobs for better pay and we were own our way to catching up when my Husband lost his Job and became Ill. And everything just snowballed from there. I know you are well paid for this kind of advise but as you can see I really can not afford an attorney at this time. I feel The land 14 acres and home are worth more then is owed but in today’s market who knows. The $$ value is not what is important here. This is my Home! It is part of family property given to me by my Father and adjoins land given to my brothers and sisters that are still living. I had thought to short sale to a family member but was told that could not be done, I would have to sale outside the family. I guess all i can do is keep making payments and pray that our situation will improve soon. Thank you for any advise you have and for giving people like myself an opportunity to let others know they are not alone in there struggles of retaining a home in an economically depressed situation.
Bill
Hello, I filed ch 7 and was discharged Jan of 2011. In my Ch 7 we reaffirmed our auto loan. We are still upside down in our auto even after they supposedly lowered our balance to “Market Value” and took our int rate from 14.4 to 8 percent. However this loan was originally in my wife and mother’s names. We found out that the car is no longer being reported on credit files. Is this the same case with my mother? Or is it still showing up as paid as agreed on her file? Thanks.
Robert Weed
Since you reaffirmed it, it should still show up on your credit report as paid as agreed–and it should show up that way with your co-signer, too. (Assuming you are paying as agreed.) However, they are not legally required to report anything on your credit report. So showing bankruptcy on your credit report would be wrong. Deleting the account would be allowed.
I very rarely see a lender reaffirm a lower balance on a car loan. Who was the lender?
(As to how it is actually being report on your mother-in-law’s report–have her get her report and see.)
Vinnie
Hi Robert,
Great info. I was just discharged last week and I live in Maryland. I have a mortgage thru a local credit union. They showed up to the meeting of creditors asking for reaffirmation but of course we told them no. For about the past six months I’ve been making about every other payment. Now that I’m discharged I’m assuming they will be contacting me? Should I ask for a modification at this point? What typically would be their next move? I don’t see how at this point I could get caught up but I am making some payments.
Thanks
Robert Weed
If you are only paying about every other month, they for sure are going to foreclose you unless you ask for a modification. So, I think now is the time to ask. You may not get one, but it seems like your best shot at keeping the house.
mary
we have a first and second mortgage , we did not reaffirm either of them filed chapter 7 discharged 12 2009, we are upside down, our first balance is 208,000 and the second is 79,000 value approximately 179 – 186 in northern virginia. First is with Chase, Fannie Mae backed, second is with greentree. WE have been paying on our second but many have advised us to stop paying them that they will not forclose on us.. What is your advice. We want to stay in the home. WE can not afford to move anywhere else
Robert Weed
Another of my blogs is on that exact topic. You can find it here.
https://robertweed.com/blog/chapter-7-bankruptcy/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/.
The short version is I’m joining the “many” who have advised you to at least think seriously about not paying Greentree on the second mortgage. Then if you think you are staying in that house for many, many years to come, offer them a cash settlement after a few years of them getting nothing.
As I say in my blog, that strategy takes nerves of steel. No guarantee that it will work. But just paying them, when you are way underwater on the first mortgage, is probably just throwing money away.
Daureen
I had a ch 7 discharge in April 2011. My husband did not file and my house is showing included in bankruptcy. We want to refi the house and pay off his auto and credit cards and possibly get me a low cost vehicle BBT won’t refi us because we did not reaffirm and my car people did not work with me after I missed payments because I did not reaffirm. They took car and asked for payment in full (would not accept the may june paymentsI was told that my only option is getting another lender to refi because they won’t refinance. The only notice they will give me is foreclosure if I ever miss a payment. Can they foreclose on my for missing one house payment?
Robert Weed
No they cannot foreclose you for being just one payment behind on the house. You don’t have to worry about that.
I’m real nervous that you want to try to refinance the house in order to pay off your husband’s credit cards. That’s the kind of thinking that led a lot of people to lose their homes.
If you can’t afford paying the credit cards, the husband should think about filing bankruptcy. Getting a higher house payment in order to get a lower credit card payment–that can look smart, but it’s very dangerous.
BB&T may be doing you a favor by saying they won’t refinance you.
Dee
This is my first time hearing about reaffirming a home loan. I don’t know if a reaffirmation was filed or not. My bankruptcy was discharged in Jan, 2008. I have never missed a payment on my house, even prior to filing. I was under the impression that I was rebuilding my credit, but now it appears not based on your information. I really have no desire to sell or to get any type of credit – prefer to pay cash – but I might need a new vehicle at some point in the future. I’d also like to get my home loan modified under the ‘Hope’ program (I think that’s the name). What are my chances of getting a decent car loan and getting the modification? Lastly, out of the last 18 months, I have only had two consecutive part-time jobs for 6 of those months. I’ve finally gotten hired for a full time position, but I won’t start working for another week. I am down to my last few hundred dollars, so it’s not possible for me to make the July mortgage payment (first time I’ll miss a payment), especially with the expenses associated with taking this new job (tires, etc.) Whether reaffirmed or not, will the mortgage company likely ding my credit with a late payment?
Thank you in advance.
Robert Weed
You should have your lawyer check, but it’s very unlikely that your reaffirmed the mortgage. Reaffirming a mortgage is almost always a bad idea–and some judges won’t allow it.
Assuming you didn’t, then No, it will not ding your credit to go late on a payment now.
Your eligibility to get a HAMP loan modification is the same whether you reaffirmed or not. However, it is almost impossible to get a modification if you are not behind, so going one payment back improves your chances of getting a modification. Contact your mortgage lender and find out their procedure for applying.
Justin
Hi Robert,
I live in AZ and my wife and I had a Chapter 7 discharge 07/13/10 which included our mortgage. B of A finally foreclosed on the house 06/13/11. My question is will we be able to buy a house after 07/13/2012 (2 -year waiting period for FHA after Ch. 7) or will we have to wait longer because of the house finally being out of our names last month?
Thanks so much
Robert Weed
As I read the regulations, you have to wait longer because of the house finally being out of your name last month. That’s the three year waiting period for FHA from when there was a foreclosure. (It doesn’t show on your credit report as a foreclosure; but it’s a foreclosure on the land records and that’s what they look at.)
If you have a lender who can get you approved sooner–and can say how–please let me know.
Keri
Bankruptcy discharge (house not reaffirmed) in July 2008 (Texas) and we are backwards in our house. Have not paid the last 3 payments and have began to receive pre-foreclosure notices. We have been able to obtain a pre qual for an FHA loan, worried that at closing something will happen and we will not be able to obtain the house. Will the credit eventually show a foreclosure if the hoiuse was included in bankruptcy? Have you had clients in this situation? were they able to obtain a new loan and move on?
Robert Weed
I’ve had clients in that situation who then had the new loan fall through when the lender saw they were still owners of previous house. I do not know what to do in that situation. If yours goes through, please let us all know.
corie
My mother is thinking about going through bankruptcy. We just simply cant afford the mortgage on the house any more. We make 3800 a month and the mortgage is 2700 a month, that is with out utilities so after all the bills we cant afford to eat.
She has horrible credit already and the car she owes 4000 dollars on it and now it’s totaled, And of course at the time we couldn’t afford insurance, so now we are forced to pay for the damages. She owes over 75,000 in credit card bills. She owes another 380,000 on the mortgage. She want to move out by next month, but I’m afraid if she just leaves the house then she will get in trouble with the the law. what should she do???? I’m only 17 and don’t really understand everything but i get the main picture. I’m trying to help my mother who is now 61 and all the stress is really starting to take a toll on her health. she has tried to commit suicide three times in the last year. please help me with some advice we will do anything TO GET THE HELL OUT OF THIS HOUSE!!!!!! she has contacted a bankrupts lawyer but he hasn’t returned her calls for 2 weeks, so i personally think she should find some one else. But mother is stubborn and wants to deal with this guy because he was referenced to her by a friend. thank you so much for reading. i am hoping to hear from you for some excellent and intelligent advice. =]
Robert Weed
Some lawyers try to do bankruptcy and five other things–and some do. Sounds like the lawyer your mom’s friend sent her to right now is too busy with other things. There are many lawyers who will be happy to help her at NACBA–the National Association of Consumer Bankruptcy Attorneys. http://nacba.org/.
She definitely needs to talk to a lawyer about bankruptcy.
This family definitely needs a cheaper place to live. But, moving out next month? I’m not at all sure about that. Looks to me like you need to live for free for a few months. Save up to pay for movers, to buy a car, to put down a rent down payment. How long you can do that depends on the law in your state and how far behind you are now. Call a lawyer who will give good advice on that.
Brandy
Question. My husband and I filed bankruptcy in 2010 and it was dismissed in May of 2010. We reaffirmed the car and the house or that is what we thought we did. Our car payments are showing up on the credit report, but the house is showing up as included in bankruptcy and not showing up. We have been trying to sell it and are considering letting it go, but are afraid of what will happen due to we thought we reaffirmed it. We know it was sold to another mortgage company than the one we started with. Are we protected if we just quit making the payments or do we need to continue to make the payments and try to find a buyer. We live in Virginia. I would appreciate any information you can provide.
Robert Weed
If you send me your case number I can look up whether you in fact reaffirmed the mortgage. Although really your BK lawyer should do that for you.
Laurie Kleisinger
Hello, my huband and I live in Michigan. Three years ago our bankrupcy was discharged. We did not reaffirm our home. Our bank called us two yrs after the bankrupcy to tell us that their legal team had gone through our file and found that we did not reaffirm. The loan officer than stated that the bank was in meetings to discuss foreclosing on us because she stated that it is the banks policy to foreclose on any mortgage with no note. We were making our payments on time and they had even given us a modification during the two yrs we were making payments. The loan officer claims that the modification is null and void since they found that we dont have a note. My husband and I stopped making payments figureing that we need to start saving up now because she so much as told us we were to be foreclosed on. They bought our loan from another bank and we also have a 2nd mortgage which is at the original bank. Is any of this legal , we are worried that we wont be able to get another mortgage even though we are 3 yrs out. Thanks for your time and insight.
Robert Weed
Gosh, I’m not sure what I can say about that.
I do know that they couldn’t foreclose on you as long as you were current. Since they tricked you into stopping–well, I don’t know what to say about that. And I don’t know what they mean by calling yours a “mortgage with no note.” You need to talk to somebody in Michigan. Sorry.
I do think you will have trouble getting a new mortgage–even if you’ve saved up a good down payment by not paying on this one–because you are still the owner of the house you are in.
Mike Rizzio
Can our doctors discriminate against us after chapter 7 discharge?
My wife went to schedule a follow-up appointment. She was told she now has to pay cash up front to see the Dr. then get reimbursed from the insurance company due to our filing chapter 7. Then if any thing is left they will give it back to her.
This feels slimy and back office to me all the years we have been going to the Dr. with insurance this has never been the case.
Thank you in advance for any light you can shed on this
Robert Weed
A hospital can’t discriminate against you for filing bankruptcy, but a doctor can. Sorry.
Jeff
Ok …lets say someone file for bankruptcy(Ch.7) in 2001. It’s 10 years now…When they going to show on the credit reports again the payments you make for the house or are not going too?Thanks,Jeff
Robert Weed
Not going to.
Jeff
What do you have to do ? Do you have to call you mortgage company to start report it? Do you think is better for credit score?
Jeff
So,what do you do? Do you call your mortgage company to start show payments or what?
Robert Weed
I don’t know of anything you can do. If you find something that works, let me know.
Merian
Hi. My husband filed Chapter 13 and was discharged last year. We have a car but it is under his 84 year old father. He signed for it as a cosignor. But since my husband filed for bankruptcy the car company stopped sending us the billing statement. I can’t pay online either. Do we still need to continue paying them?
Robert Weed
If you stop paying, they will repossess the car. At least they will, if it’s worth coming to get. (Unless the car was paid off through the chapter 13? Obviously i haven’t seen your chapter 13 plan.)
Terry Roberson
I was discharged a chapter 7 in June 2011 and my car was not reaffirmed. I am currently making payments on it but the car now has major issues and will cost a lot of money to fix. If I stop paying and it gets reposessed will it show on my credit as a reposession? or not due to it was already included in my bankruptcy?
Robert Weed
It will show as bankruptcy–which it will be showing already, even if you are paying. The repo won’t show.
(At least it should by law show as bankruptcy. With the credit bureaus, it is always smart to actually check.)
Nicki
Our bankruptcy was discharged 2 years ago. While looking at our credit report recently we notice that some of our credit cards have no history at all and yet others still show our late payments pre bankruptcy. Should this still be showing? Is it affecting our credit?
Robert Weed
Yes and yes. They are supposed to be complete and accurate. So they can (and actually should) show the late status leading up to the bankruptcy. And that does affect your credit, a little. You get back to good credit faster if you go straight form current to bankruptcy and never show late.
Christy M
My husband filed bankruptcy alone last year and included the house. I was not on the mortgage only the deed. I am in process of trying to purchase a different home since I’m thinking they’re not going to let us live there forever for free (ha ha). Underwriting is now stipulating that they need proof that the house payments are ‘up-to-date’, which of course they are not. They have not foreclosed yet. Any suggestions?
Robert Weed
Well, I wish I did. As I say here, as I understand the current requirements, this house will have to be out of your name for three years before you can get approved to finance a new one.
Mitch
I appreciate your review of my question. I think this particular issue will affect a lot of people and they need to be advised of it up front, not after the fact. I think it is too late for us to mitigate this situation:
We are almost two years out from discharge on Ch 7. Home was included in the BK, not reaffirmed. We were advised by multuple parties that we could walk at any time and it wouldn’t show on our credit. We decided to do that since we are $150k upside down and our payment increased $1K/mo (ARM). We tried to force a modification by stopping payments but our bank offered a modification where the payments and interest rate actually increased because of our income. We have now received a Notice of Trustee Sale which is recorded with the county assessors office.
Question is, the foreclosure from the lender won’t show on our credit record but it WILL STILL SHOW on our credit report under public records?
It seems that people need to understand that. It still will ruin our credit because of this. We have worked hard to rebuild our credit and had we known this would have handled it differently.
Or did I misunderstand that? Is there a way to have this removed on our credit report (public record section) since the home was included in the BK?
Since it was just a notice of Trustee Sale and it has not foreclosed yet, if we do a died in lieu of or a short sale, it won’t foreclose. Is that Notice of Trustee Sale just as bad as an actual foreclosure on the credit report?
If so, then people need to be advised to NOT let their house go into foreclosure even if included in BK. Either let it go back during BK preceedings, do a Deed In Lieu Of or a short sale to avoid it impacting your credit.
If you know of a way around this can you share? Thanks for your advice!!
Mitch
Thank you in advance for reviewing this comment as I feel like it impacts many of the people that are writing to you.
I am wondering if I was incorrectly advised that after a CH 7 it would be OK to walk away from our home. I was told it wouldn’t show on our credit due to the home being included in the BK. I was told this from multiple sources. My BK was discharged 11-2009 and the home was not reaffirmed.
But now I am finding out that once a Notice of Trustee Sale is filed with the county assessors office, it is public record and goes on your credit.
If that is indeed the case, people should be aware that they need to either do a short sale or Deed in Lieu of as to not further damage their credit after the BK with a foreclosure.
Is it possible to have the credit bureau’s remove that from the credit report if a home was included in the BK and later goes into foreclosure? It seems like it is a bit of a double jab since the BK already affected my credit and we could have given the house back during the BK proceedings with no repercussions.
Also, what if the home is not actually foreclosed on (brought current, short sale or Deed in Lieu of)? Does that initial Notice of Trustee Sale appear on the credit report?
Thanks again, I think this will affect quite a few people from what I have read.
Robert Weed
Mitch, I’ve never seen that here in Virginia. It may happen where you are, I’ve never seen it.
Erika
I am so dissappointed that our two house payments that we’ve been paying of the past two years since our bankruptcy have not been helping to rebuild our credit. I started searching for answers this morning when I learned this week that I do not qualify for mortgage reduction right now becuase my credit score is 220. It used to be 780 before I got into real estate debt over my head. I thought for sure that the continued payments on our first and second mortgage for our personal residence was helping to rebuild our credit! This is huge, gut-wrenching news.
tim D
Here is my Question, which is similiar to most of the others:
My chapter-7 was discharged last July and with my primary residence included. My rental property shows current, my primamry residence show included in bankruptcy(7). No reaffirm on either one before or after the BK-7. Ocwen is the lender on both. Myself, just like the others on here, want to walk out of the primary because I am $120k under the rug. I am afraid the the “forclosure” mark on the credit report will make my life worse if I do this, because at some point, i;d like to buy another home. The debt on the credit report for the primamry shows $0, although the maortgage staments are all kept current (of course who knows of a bank that won’t take your money).
I need an educataed opinion on what my liabilities are from walking away from my primamry home that was already discharged in the bk(7) last july. I am willing to hire counsel to get the deed in lieu done to stop forclosure. if I have to. Can someone give me advice? What are my potential liabilities ?
-TD
Robert Weed
This is what I know. The house will (or at least is supposed to) show “bankruptcy” on your credit report, whether you pay or don’t pay. Your credit report shows “bankruptcy.”
If you don’t make the house payment, they can (and eventually will) foreclose you. That foreclosure does not show on your credit report–but it is still a foreclosure. You cannot get approved on a mortgage until three years after the bankruptcy. You also cannot get approved on a mortgage until three years after the foreclosure. Having a short sale or deed in lieu, rather than a foreclosure, may help you a little but not much.
There may be loan officers out there somewhere who get around these regulations, but they are the regulations. If someone knows a way around the regulations, they are not putting in in writing.
Kris
I have a discharged chapter 7 bankruptcy, my car loan was not reaffirmed. I have never been late on my payment. If I stop my payments can they repo the car? I read they can not come after the car because I was not in default prior or during the BK? is this true?
Robert Weed
They will absolutely repo the car if you don’t make the car payment. That’s why they are on the title to the car. The bankruptcy means they cannot after you for the money, but they can get the car.
tim D
@ Robert;
The debt was already discharged through Bankruptcy. The only forcable action at that point would be for the lender to take their collateral back, correct? This would be though deed in lieu or forclosure; is that right?
-TD
Sherry Livingston
After a chapter 7 discharge, if your house wasn’t re-affirmed in the bK, will you ever get the deed to it, if you pay it off?
Robert Weed
Yes. When it’s paid, it’s paid.
Christine
My Chapter 7 was discharged exactly 2 years ago. The house was surrendered and the lender filed the motion to lift the stay which was granted. However, they have never foreclosed. I moved out of the house 2 years ago and left Virginia and it has been sitting vacant, going to rot since then. I know I can’t force the lender to foreclose, and the taxes are getting paid, however, what action can I take to get it out of my name? If I sell the house, what happens to the proceeds? Can I do a quiet action title? Can I file some kind of adversary proceeding following In re Pratt under the theory that failure to take back the property and releasing the lien is a violation of the automatice stay? I am so ticked off about this because the lender was so gung ho on getting me out of the property and foreclosing and not working with me that I was forced to file the chapter 7 and get out. Now the house is falling into ruin and they have done nothing. I am concerned that there may be a title issue because this property is part of an MBS and there was no recorded assignment so maybe the whole MERS, improper recordation, robo signing situation has touched mine? I don’t know but I would like to so something to get my name off of the title.
Robert Weed
I don’t have any good answer to that. What I know to tell people (now) is don’t move out. Until there’s actually a foreclosure, don’t move out.
Christine
Thank you for your comment. The only reason I moved out was because they were so fast and furious and even followed up with getting the stay lifted, I thought it was just a moment or two before I found myself on the street because they had already had the property advertised for the foreclosure sale before I filed BK. It was my understanding that lender can pick up where they left off once the stay is lifted. I had a chance to take a job promotion with a salary increase out of state which is another reason I moved so fast. Luckily, there is no HOA. If you hear anything about those of us in this “lender won’t foreclose after BK situation” please keep us posted. Your blog has been a great help.
Mary
My Boyfriend and I filled Bankruptcy in 1993 and never reaffirmed the home we were living in. We continued to make payments until 2009, but of course were not reported on the credit report. I moved out of the home and moved to another state, my boyfriend stopped making the mortgage payments and the house was forclosed on in January 2011. I have a 720 credit score and this forclosed proprerty is not on my credit report. the Bankruptcy has been discharged because it has been 10 years since we filed. By the way this was an FHA Mortgage. I am currently in the process of purchasing a new home in another state and was preapproved for a conventional mtg. I now have signed the contract on the home I am purchasing and was approved with a few conditions. The UW is reviewing the file for the final approval . The closing date has been set for October 18 and I wondered if this FHA forclosed property will show up somewhere before my final approval?
Robert Weed
Please let us all know. Maybe its so long ago that it won’t pop up.
Ross
I just filed bankruptsy and I already received my papers. I signed to re-affirm my car but my lawyer told me not to go to court for the reaffirmation just incase I couldn’t pay for the car. Does this mean I didn’t reaffirm? The car is worth less than whats left on my payments. The car is giving me issues and I am wondering if I should keep it or not. I want to re-establish my credit and dont this to be a problem Also, how soon should I apply for credit cards, I want to buy a house soon and want to fix my credit as soon as possible.
Thank you.
Robert Weed
You need to go back to your lawyer about whether you reaffirmed the car. Sounds like your lawyer tried to talk you out of it. That’s what I would have done.
Here’s my link on getting back to good credit. https://robertweed.com/blog/after-bankruptcy/after-bankruptcy-getting-back-to-good-credit/
SB
In re: to the comment about a foreclosure not showing on your credit report as a foreclosure after bankruptcy that is incorrect. I was told this also when I filed in 2008. Now in 2011, I’m ready to buy another house. The only thing stopping me is the foreclosure on my credit report. Although it was included in the bk, it was quite some time after before the lender actually foreclosed. I am now 3 years out of the bk and could qualify if it weren’t for the fact that the foreclosure on the report shows only 1 year ago. You now have to wait 3 years after a foreclosure before you can close on another home.
Robert Weed
This is really tricky and hard to explain right. The after bankruptcy foreclosure does not (legally anyway) show up on your CREDIT REPORT. It does not affect your credit score or whether you can get a good car loan. But SB is correct that there still really is a FORECLOSURE–even though it does not show on your credit report. And that real FORECLOSURE does keep you from getting approved on a mortgage for three years. (And sometimes they take a long time after the bankruptcy to actually foreclose. So I now know to tell people, DON”T MOVE OUT.)
chad
Im in the same boat thinking about just leaving. I live in GA i was discharged in 2005 i qualify for a new construction loan to build a house. Im having a hard time selling the house. If i leave will anything show up on my credit. It already says it was discharged under BKrupcy. I have made my payments on time for last five years since the bankruptcy. if I get the new home and build on my new property will anything happen to me. If nothing will a happen do i just leave the key and shut off all utilities and live in my new home?
Robert Weed
Your credit report (legally) will be the same whether you keep paying or move out. I’d be positive I had that new loan approved though, before I made any final decision. It’s real hard to get a mortgage loan now if you already own a house–even if the debt has been discharged in the bankruptcy.
If you have the loan for the new house and it’s built then yes, just shut off the utilities and let the mortgage company know you’ve moved out.
chad
thanks for the reply Robert. Do you think i could stop paying my house in novemeber and if my new home is finished in say march could i get away with not making any payments on the old home and try to time it right to move out to the new home and dodge the forecloser for about 3 or 4 month and save those payments? Also will a forcloser show up on my credit or just contiune to say discharged? and came they come after my new home? thanks again for the advise
Robert Weed
Going four or five months without paying should not be a problem. No the foreclosure will not show (legally) on your credit report; it will continue to show discharged. No they cannot come after your new house. I’m worried about your new loan falling through, but you seem real confident about that.
chad
yes i have been preapproved and they are aware of the situation. Owe home income is 85,000 and we no debt other than the cars and built my score back to 680 over the last 6 years. want about the insurance on the house. if i go to get home insurance on the new house will that affect it all?
Ashley
We had a ch.7 bk that was discharged in2005. We have continued making payments to keep the house ,but I am now wanting to rent a house in a new school district. We are behind on our HOA dues. What happens if we walk away without getting them caught up?
Robert Weed
The HOA will sue you. Those HOAs are desperate, at least around here, because there are so many foreclosures and empty places, and broke home owners. You need to catch them up and keep them caught up, even after you move out, for as long as you own the house.
Chris
I have recently been discharged from my BK (7) and my home was not reaffirmed. I had a second mortgage that was also discharged. Can I reaffirm now and not be affected by the second mortgage? I was considering the Deed in Lieu as my next steps but I have not been contacted in reference to Foreclosure as of yet. Can I use this as an opportunity for a fresh start and just start paying the mortgage again?
Robert Weed
Do NOT reaffirm the mortgage. If you do, your credit is better, but then you can’t move out. Not worth it. I don’t know the details of your situation but I tell a lot of my clients to pay the first and just not pay the second. Here’s my blog on that. https://robertweed.com/blog/chapter-7-bankruptcy/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/
Tim
My chapter 7 was in July 2009 and I never reaffirmed my first or second mortgage. But I kept both of them current, just because I didn’t want to uproot myself and move. Well, I’m only paying the first now. I stopped paying the second 3 months ago because of a slight decrease in income. The house is worth 158K; first mortgage is 152 and the second is 65. Doing the math, there’s 217K in liens and only 158K in value, if in fact, the house sold for that. The second has sent me notices of foreclosure with intent to accelerate the note. Refinancing and modifications have all been rejected, so I offered them a settlement of $500o, figuring that’s probably all they would get with a foreclosure. Or maybe they wouldn’t get anything at all. They declined that as well. So, I’m going to stay here until they actually foreclose, but here’s my question. From the mortgage lender’s point of view, what do they gain with a foreclosure? I mean, do they just do it to spite the homeowner or do they get some kind of tax credit or foreclosure insurance from the government. I just don’t get their motivation. I realize they don’t have to accept anything but still, they would get nothing. Maybe after a couple more months of non-payment, they will soften and accept a deal. Who knows? Just wondering what is the strategy, if any, for negotiating with a 2nd mortgage. Any responses or opinions would be appreciated.
Robert Weed
I don’t know of any advantage to them–other than as a way around the BK law. Because of the bankruptcy, they are not allowed to send you bills–but they can send you notices of foreclosure. This will really test your nerve–please let us know if they really do it, or if they are bluffing. My guess is they are bluffing–but that’s easy for me to say, because I’m not living there.
Mitch
I found out my mortgage company put “In the process of foreclosure” on my credit report, even though it was covered in the BK. There are no late payments showing BUY they put it in the comments section. It is Chase, and they have tried anything and everything to make sure I am penalized. Is this a violation of the FCRA?
Brandie A.
Ok, here is my question… We filed a BK7 in Jan 2010, it was discharged in April 2010. In this BK was a 2007 Jet Ski Boat, we paid on it through the summer (it was not reaffirmed) but it was a fight each month to make a payment and then they would take 6+ weeks to process the payments. So the question I have is it has been over a year and a half since the BK was discharged, how long does the creditor actually have to come pick up their property? Can they wait years and then just show up? How does that work. Also there was a truck included in the BK, they have already indicated that they are not going to pick up the truck. Is there a way for us to get a title to the vehicle in question?
Robert Weed
First on the truck. There’s a not very good way to get title. You can have your lawyer reopen the bankruptcy and file a motion to redeem the truck. you have to offer to pay the value–which I’d say its $100.00, since they have told you it’s not worth coming to get. Here’s something that makes no sense to me. Fairly often, even though they don’t want it, when you file a motion to redeem it a $100., they send a lawyer to fight you and cliam its worth $4200 or some ridiculous amount. That’s why I say this is a not very good way.
Otherwise, just do nothing. So, you never have the title. So what. Some day you’ll have to pay a towing company or somebody $200 to take it off your hands, because you will never be able to sell or trade it. That’s my recommended solution.
On the Jet Ski. I’d guess they have three years; but the older it gets the less likely they are to bother. If you were my client, and they came looking for it, I’d tell you to tell them, “call my lawyer.”
Georgia
My husband and I filed BR7 but reaffirmed on the auto loan and mortgage. We signed the paperwork from both companies and returned them to the attorney as instructed. The auto loan shows on our credit reports as active and current. The mortgage shows as discharged in bankruptcy. I’m wondering why. I’m getting the statements from the mortgage company that say,”this is not an attempt to collect money …” They too have our account as “Bankruptcy”. I guess my question is, what happens to the equity in my home?? Can I sell it someday and collect my equity or can I not sell something that is not legally mine?? We hadn’t planned on staying in this house forever but is our only choice to do so until its payed off if we don’t want to lose money? Our plan was to reaffirm and continue to build equity and sell someday.
Robert Weed
Reaffirming a mortgage has NOTHING to do with keeping the house. If you want to keep the house, you make payments. If you want your payments to show on your credit report, then you reaffirm. I worry about my client’s credit reports more than most bankruptcy lawyers, but I think having your payment show up on your credit report is a very small advantage compared to what you give up. What you give up when you reaffirm is the ability to move out and not owe them any money if it turned out you can’t afford the house or values drop on you some more.
(Now in some states, they can’t come after you on a mortgage ever; in that case you don’t give up anything much by reaffirming. I don’t know what state you are in.)
You clearly remember that you did reaffirm; maybe your judge refused to approve it. Some judges won’t approve a mortgage reaffirmation since they are usually a really, really bad idea. You need to go back to your lawyer and find out if you did reaffirm, if it got filed with the court, and if the judge didn’t block it. In that case your payment should show on your credit report. If they aren’t, you should do a dispute with the credit bureaus, and when that doesn’t work, talk to a lawyer in your state who does Fair Credit Reporting law. Look at NACA.net. The National Association of Consumer Advocates.
Carol
I filed Chapter 7 in 2004, my home (mobile) was supposed to be reaffirmed. I am behind on my payments and the mortgage company wants me out! My attorney and I are just now finding out the home was never reaffirmed, it says that it was supposed to be on my bankruptcy papers, but the mortgage company says it was never done…apparently they were to send me the papers to sign and I never received them. My attorney is telling me to stay in the home (the mobile is on a leased private lot) And that they cannot just come and hook up to it and pull it away, (with all my belongings in it) as they are telling me they can. If they can come and take your car, they certainly could take my home, right? Am I just prolonging the inevitable by staying here???
Living in the state of Pennsylvania.
Robert Weed
Aren’t you glad you didn’t reaffirm; if you did, they would boot you out and then still sue you. That’s bankruptcy law.
Other than that, your lawyer in Pennsylvania knows a lot more than I do about how long it takes and how hard it is to repossess a mobile home in PA.
Carol
Well yes, I am, lol! Okay, thank you!
Sandra
This blog if very informative.
I just filed for Chapter 7 bankruptcy and got discharged last month 10/11. What happens if i’m late on my mortgage payment ? ( basically I’ll be behind 1 full payment until I catch up)
I’ve been paying my mortgage on time (never been late) but due to financial difficulties I won’t be able to pay the full amount this month.
Robert Weed
Sandra:
I don’t know the laws in your state, but I don’t know anywhere that people get foreclosed being one payment late. You just need to catch it up so you don’t get hit with a late charge every month.
April Ross
If I did sign a reaffirmation agreement, are my late/on-time payments then reported to the credit bureau?
Robert Weed
April:
I don’t know whether they are, but I can tell you they should be, yes.
Reginald Grey
I filed for bankruptcy last year and signed a reaffirmation agreement. My payments have been earlier than on time for the last year. Recently my wife lost her job and all of the household responsibilities are left to me. I am a little over extended. I have not made my October payment or my November payment. I contacted my mortgage company through the website and let them know that I would be able to make the October payment next week, as well as make a payment toward the November payment. My question is, since I filed for bankruptcy and was discharged and now I am late after reaffirming the loan, does that mean that they will automatically foreclose on me? Will they want me to move right out? Next month I will have the money to catch up. I want to keep the house if possible. I am just hoping that being 1 or 2 months behind doesnt have them to foreclose on me.
Robert Weed
How long it takes them to foreclose depends on your state laws, what values have done in your state, how far backed up the mortgage companies and foreclosure lawyers are. But no, they will not automatically foreclose. I don’t know of anywhere that they foreclose people just two months behind. The national average now is more like a year; in Virginia, where it’s very fast, it’s usually five or six months.
prodigious idea
I did not reaffirm my mortgage after including it in a properly filed/discharged bankruptcy. I did not make any payments after the filing and was ultimately foreclosed. One question: Will the foreclosure appear on my credit report(s). Thank you in advance for your reply.
Robert Weed
Idea:
Your credit report SHOULD show bankruptcy, and not show foreclosure. What does it show? You should call each of their 800 numbers and check. You can see what I have to say about that, here. https://robertweed.com/blog/after-bankruptcy/after-bankruptcy-getting-back-to-good-credit/
Deziyah
Hello filed chapter 7 and debt was dischgd in march 2010, my mortgage and car loan was reaffirmed however my mortgage was sold and is now owned by Fannie Mae but serviced through Seterus. This year I have had some financial hardship and now have 4 late payments on my credit report for the car loan, I made sure to make my mortgage payments on time but due to mass law only the owner of the mortgage can report to the bureaus not the service do my mortgage is no longer on my report. I want to refinance so that my mortgage will be reported but I am wondering how will the 4 late payments affect my credit and ability to refinance?
Robert Weed
Deziyah:
You bet those 4 late payments will hurt you. Should have discussed carefully with your lawyer whether you should have reaffirmed the car. I hardly ever allow my clients to do it.
Wells Fargo customer
I filed for a Chapter 13 bankruptcy about six years ago. I recently sold my home and obtained a copy of my credit report, only to find that Wells Fargo has reported none of my mortgage payments- not even a mention of “included in bankruptcy”. My question is, is there a way to get my paid off mortgage included on my credit reports, as this will severely impact my credit score, should choose to purchase a new home in the future. Thank you for any help or guidance that you could provide me.
Robert Weed
Wells Fargo customer
You need to do a dispute with the credit bureaus–since this is a Chapter 13 they should have been reported. When that doesn’t work–do a second dispute. Then see if you can find a lawyer who will sue them. (Try naca.net) This is why I work with my bankruptcy clients to make sure their after bankruptcy credit reports are right. Only a handful of lawyers in the country do that.
Michelle D
I filed Chapter 13 2 years ago. I was behind on my mortgage & the arrears were included in my bankruptcy. I’ve been current on my payments since declaring. I just received a letter from Mortgage company that monthly payment decreased effective this month (Nov 2011) due to interest rate change, but did not give a payment amount. The letter said I would have to call customer service to get the amount. When I called, they did give me the new amount, but kept saying it wasn’t effective until Nov 2011 & I was still making 2010 payments. I was told my payments go into a “suspended account” & I should still be making whatever the payments would have been when I got behind. This doesn’t make sense to me if my arrears are supposed to me included in the trustee payments. I thought I was just responsible for the “current” payment?
Robert Weed
I agree with you. Talk to your bankruptcy lawyer.
Stacy
Thank you so much for this article. I just realized today when looking at my credit reports that all 3 showed my mortgage like this and I was about to call them on it but hit up google first. Thank you again.
Robert Weed
Thank you!
RICHARD
I recently filed bankruptcy and now I can’t make a mtg pmt online. I was 2 mths behind on the verge of 3 mths behind due to unemplyment. I have a job now.
The mtg company who I made pmt arrangements also stated my repayment plan would be null and void should I file. Now that all the credit card debt is gone I can afford my mtg pmt. Is there a different dept with the bank I have to call to make the pmt. Must my BK be discharged first? Please advise
Robert Weed
They may send you to the bankruptcy department. You do not need to wait until the bankruptcy is discharged and you should make every effort to contact them and stay in touch.
Rebecca
I filed bankruptcy 11-2004 (in Texas) and included my house and did not reaffirm. Then in December 2009 I signed an assumption warranty deed for my exspouse to assume the deed and the note. He placed the deed in his name but never assumed the loan. He made the December 2009 payment and never made another payment. A year the mortgage company forclosed on the property. As of today my bankruptcy has been discharged but I have another negative mortgage on my credit report for the same property. So the deed shows his name and the loan is in my name and the bank sold the house. Can a mortgage be discharged in bankruptcy and then placed again on your credit reoport?
Robert Weed
No. It absolutely should NOT show on your credit report except as a bankruptcy in 2004. You need to see which credit report shows that; dispute it with the credit bureau, with a copy to the mortgage company. And if this does not fix it, find a lawyer near you who does Fair Credit Reporting law. You may want to search the National Association of Consumer Advocates.
ivy
hello
I reafirmed my mortgage after my chap 7 in 09. I’ve paid my mortgage on time & my credit report doesnt show this information. What should I do? or why doesnt it show, does this mean I really didnt reafirm it?
Thanks
Robert Weed
Even if you did reaffirm your mortgage, I would not be surprised if your credit report didn’t sow it. Credit reports are not very accurate about anything that’s unusual. But, did you reaffirm? You, or your lawyer, needs to look at the docket of the court, available on the internet, and see if a reaffirmation was filed. (Reaffirming a mortgage is rarely a good idea, so I’m guessing you didn’t. Your lawyer should have really counseled you about what a serious decision that would have been.) If it was reaffirmed, you need to dispute it with the credit bureaus, maybe sending attached a copy of the court docket to your dispute letter. If you didn’t reaffirm it, then it’s being reported right.
Tom G.
Attorney Weed. Hi. You’ve probably answered this question already but here it goes. I was discharged from my 7, 10 months ago. I did re-affirm my Cenlar mortgage (owned by Freddie). I have sent two written requests asking them to report to the credit agencies. They replied to one stating their “policy” that they do not report after BK, even though I re-affirmed the debt. I have not received a second response to my second request. Is there something in RESPA or FDIC or any agency that would require them to report if requested in writing? I had an 800 score and now a 670. I was never late on the Mortgage and don’t plan on it. I made a bad business decision that got me in over my head in credit card debt. I worked out a payment plan to pay the debt but after 1 year of on time payments, the creditor raised my minimum payment from $367 to $1800 each month. I had no other option than to file. Thanks for lending your ear and expertise!
Robert Weed
Apparently you’ve gotten no benefit whatsoever from your decision to reaffirm. I HATE that. Are they reporting discharged in bankruptcy, or are they just not reporting?
It would help me to understand if you let me know what advantage you thought there was and what your lawyer told you.
There’s no legal requirement to report, so if they are just not reporting, I don’t think there’s anything they can do. Discharged however is false. If they are saying that, you need to dispute it with the credit bureaus, certified mail, keep a copy, and send a copy to the mortgage companies. If that doesn’t work, dispute it again. If two disputes don’t work, find a credit report lawyer in your state. Go to the National Association of Consumer Advocates at naca.net.
Steph
Attorney Weed,
My husband and I filed for Chapter 7 bankruptcy in 2009 and under the advice of our BK lawyer, did NOT reaffirm our home mortgage. We were told that if we continued to make monthly, on time payments we could stay in our home. We have never missed a payment (or have been late) all 5 years that we’ve lived here. Now that we are passed the 2 year mark, we are looking to buy a new home and we are getting told different things from different lenders and I don’t know which to believe so I’m hoping you can help.
1) Can we obtain an FHA mortgage even though we did NOT reaffirm our loan?
2) Do we need to sell our home in order to get a new mortgage (is it even ours to sell)?
I was under the impression that as long as our credit score was high enough (which we have a 650 score) that we could in fact get a mortage even though we did not reaffirm. Any help or advice you can give would be greatly appreciated. We are really confused and would love some clarification.
Thanks
Confused in Indy
Robert Weed
Dear Confused: Don’t think your ability to get a loan has anything to do with reaffirming the mortgage. But to try to answer your questions. The only one I know for sure is yes, the house is your to sell. However as I understand it, you cannot get a loan unless this house is out of your name–meaning sold–or it’s rented. During the crisis they let way too many people had multiple homes and now the lenders are really allergic to it. I also think you need three years after the bankruptcy, not just two. In a lot of places rents are high, because no one built apartments for a couple years, so you might be able to get a rent that covers your mortgage. Then I’m told that lenders would feel ok about putting you into a new home.
So–if the value is up and you can sell, then you can sell the house and get a mortgage to buy. If the value is low so you can’t sell, but rents are high, I believe you could rent it out and also get approved to get a mortgage to buy. If the value is low, so you can’t sell; and rents are low, too, so you can’t afford to rent, then I don’t know what you can do.
Dave G.
I’m married, but filed for chapter 7 as an individual to get rid of some bad business debt associated with a failed charter fishing business. The house, automobile and several other debts were in both of our names. I reaffirmed the auto-payment but not the mortgage or any other co-debt. Is my situation the same? Will these still show on my wifes credit but not mine?
Thanks,
Dave
Michigan
Robert Weed
They should, yes. Will they? That’s why I tell people to check their credit reports. Should be showing current. Might be showing, bankruptcy–that’s fairly rare. Maybe not showing at all. That’s a possibility too. she needs to check.
Shellie T.
Hello, We are 2 years out on our chapter 7 BK. We did not reaffirm our mortgage. Our house is upside down and we are considering walking away. We know this will not affect us on our credit report as it can not show any late or a foreclosure because the loan was not reaffirmed….but can walking away hurt us in any other way? What are our repercussions in this instance? Also what about the property taxes? How does that work when they are in our name? Will we still be liable?
Robert Weed
Until its actually foreclosed, you are still the owner. You are liable for the home owner association if there is one. You are responsible for zoning issues–like cutting the grass. You are liable for the taxes. Around here the mortgage companies usually pay the taxes even if you are not paying the mortgage, usually. Because they don’t want the county to take over the house. I don’t know how that works where you are.
Paul
In regards to filing Chapter 7 in Virginia, and also in regards to relieving credit card debt, what if my mortgage is with the same financial institution as some of my credit card debt? Will that affect my mortgage in anyway? (ex. Bank of America)
Robert Weed
No. You don’t have to worry about that.
Paul
Thank you for your response. Your insight is most helpful. I’ve read through some of the other information and saw something regarding dormant bank accounts or bank accounts that aren’t used and maybe have $5 in them. It was recommended that those accounts be closed. Does this also apply to private credit union accounts? For example, for years I’ve had a savings account with a credit union that is for certain city employed people. Over the years I have had loans through them for cars, consolidations, etc. But I have no outstanding loans through them nor do I have any credit cards with them. I only have a savings account with no more than $100 in it and there is one minor savings account there. They are not actively used in any way. Do I need to close out those accounts. Again, this is a credit union that is only open to the employees and familys of employees of a certain type of city employee. I’m hoping that I do not need to close them, but I would if completely necessary. In addition to that, do I need to be concerned about PayPal accounts and Square accounts, and non-profit organization accounts that I am a signer on. “Square” is a service that allows you to accept swiped credit card payments through a smartphone.
Thanks again.
James
I filed for chapter 7 bankruptcy and I didn’t reaffirm my mortgage but I am still paying on the house. I have been paying for the past two years on the mortgage. If I walk away from it now will it be on my credit report as a foreclosure and how long do I have to wait to get a new mortgage?
Robert Weed
No, your credit report will not (legally, anyway) report a foreclosure. It shows bankruptcy, whether you pay or don’t pay. But there will be a foreclosure in the land records. However, right now mortgage lenders want to see three years after the bankruptcy discharge–and also three years after the foreclosure on the land records. So that’s your problem.
A few of my clients have talked their way around that, but I don’t know how. Also, some lenders have told me you can avoid that problem if you rent your place out, rather than walk away. And in some parts of the country rents are real high. So that might be worth thinking about.
I’m a Virginia bankruptcy lawyer. You should try to talk to a mortgage lender in your area, and see what you can find out. Please post it here, if you can.
Daniel C.
I’m in Texas and filed bankruptcy in 2003 but my home was not reaffirmmed. Since then the value of my home has dropped significantly and now I’m severly upside down with this mortagage and am behind on my mortgage payments. It is a fixed FHA loan and I am on a forebearance plan which is more than my original mortgage payment. My question is if I loose the home will it impact my credit negatively or am I protected since my mortgage was never reaffirmed? Would trying to do a short sale make a difference?
Robert Weed
In terms of impacting your “credit”, there are two different issues. Your credit report and therefore your credit score will be based on the 2003 bankruptcy. The mortgage should be showing bankruptcy 2003 and nothing since then–whether you pay or don’t pay; or pay for years and then stop. Since debts discharged in bankruptcy should drop off your credit report after seven years, that loan now should not be showing at all.
BUT–this is big–your eligible to get approved for a mortgage is different than something like a car loan, which almost totally depends on your score. To get a mortgage, they will search the land records and see a foreclosure. The foreclosure should NOT show on your credit report but it will show on your land records. And that will block you form getting a good mortgage for three years.
Getting a short sale might help some.
In some parts of the country, rents are very high. If you can rent the place, then you might be able to go straight to buying again, if that is what you are trying to do.
I’m a Virginia bankruptcy lawyer. I am not a Texas mortgage lender. You should talk to a mortgage lender in your area and see if they say what I’m saying here. And let us all know what you find out.
Paul
Sorry for this repost. I was affraid it got lost.
Thank you for your response. Your insight is most helpful. I’ve read through some of the other information and saw something regarding dormant bank accounts or bank accounts that aren’t used and maybe have $5 in them. It was recommended that those accounts be closed. Does this also apply to private credit union accounts? For example, for years I’ve had a savings account with a credit union that is for certain city employed people. Over the years I have had loans through them for cars, consolidations, etc. But I have no outstanding loans through them nor do I have any credit cards with them. I only have a savings account with no more than $100 in it and there is one minor savings account there. They are not actively used in any way. Do I need to close out those accounts. Again, this is a credit union that is only open to the employees and familys of employees of a certain type of city employee. I’m hoping that I do not need to close them, but I would if completely necessary. In addition to that, do I need to be concerned about PayPal accounts and Square accounts, and non-profit organization accounts that I am a signer on. “Square” is a service that allows you to accept swiped credit card payments through a smartphone.
Thanks again.
Tony
Dec 2010 I started the Chapter 7 process in Michigan. I did a Statement of Intention to reaffirm my mortgage with Citi Mortgage. Sometime between that date and the date my Chapter 7 went through Feb 2011 my mortgage was sold to Nationstar. My payments are not being reported to credit agencies and I also have no access to my account online or through mailed statements from Nationstar. I was told my reaffirmation doesn’t show up in a system called PACER and Citi Mortgage must have never sent reaffirmation papers to the lawyer. I was also told I would have to pay my lawyer to re-open the case and file reaffirmation with nationstar. Is this the correct process and who messed up Me, Layer, Nationstar Mortgage or Citi-Mortgage…Thanks
Robert Weed
Tony:
The law is clear, at least to me, that you CANNOT reopen your case to reaffirm the debt. The banks say you can and I guess a few Judges around the country allow it. Nearly all of them say No.
More importantly, I think you don’t want to. Balancing the small improvement on your credit if you keep paying the mortgage against the disaster of something happening, or values just keep falling, and you can’t afford to pay–I just think there’s no comparison. Now I know that you “know” you can afford to keep this house. I also know that you “knew” that you could afford all those other debts you filed bankruptcy on–at least when you got them. Giving up the protection of the bankruptcy on your house–your biggest debt–while house prices are continuing to fall almost everywhere in the country–just so you can get back to good credit three or four months sooner–I think that’s really a dumb idea.
the best way to protect your credit is to NOT reaffirm, so after bankruptcy late payments do not hurt your credit, and you can give up the house down the road if that turns out to be the smartest thing for you to do.
Andrea
My bankruptcy was discharged in January 2011. I have continued to make payments on my house, but I never reaffirmed the debt. It was my understanding that I could essentially walk away from the house at any time. However, now the mortgage has been sold to another company, and I am being told that I am now obligated to the home loan again, but I didn’t sign anything. What is my obligation at this point?
Robert Weed
I see that a lot–collection people for the mortgage company handing out some excuse why the bankruptcy doesn’t apply to them and you still have to pay.
For my clients, I sue on that. Every time. That’s a violation of the bankruptcy discharge and they try to scare people into making payments when they have a choice of walking away. And it will happen more and more unless the banks get sued often enough that they put a stop to it. See if your lawyer will sue them.
Tracy
My BK was discharged in Jan 2011. I included a morgage my Ex husband has a quick claim to in our divorce. After paying a year on the house he has noticed that it is not being recorded on his credit. WFargo said he could only assume the loan in his name(if he qualified) at the loan value which is bad business because the house is worthless now. If he walks away what could happen to his credit. He only shows the morgage with no activity as of Jan 2011 on his report now. Would he have a foreclosure? Could they come after future property of his? Will he be forced to BK? Thank you for any help you can give him
Tracy in Las Vegas
Robert Weed
Assuming both of you were on the loan, the debt is now his. Right now it SHOULD be showing current in his credit report. Your bankruptcy does not protect him. If he walks away then he would have a foreclosure and probably sooner or later his credit report would show that. And yes in Virginia where I am and Nevada (I’ve been told) and most of the country, after the foreclosure they can come after him for the rest of the money. So he could be forced into BK. The value is way upside down and he probably won’t live forever. He needs to think through his options and maybe talk to a bankruptcy lawyer there soon. Right now his credit is not as good as it should be, because it should be showing him current on the house. BUT if he’s thinking about leaving, or should thing about leaving, his credit will be better than it should be if he lets it go late. So deciding whether to push the credit reporting issue now depends on what his plan is for the house over the next few years.
Jim Thurber
My wife and I have just recently been discharged from Chapter 7 in Virginia. Our mortgage, which is about $100,000 underwater, was not reaffirmed. Wells Fargo holds the mortgage. My question is simple…have you seen whether or not people in our position can use as leverage the BK to obtain principle or interest rate reduction. We have been on time with mortgage payments for the past 2.5 years but we believe we are simply paying rent to the bank. It could be many many years before we see any break even point. Who would I contact to try and negotiate our position with Wells Fargo
Thanks
Jim Fredericksburg, VA
Robert Weed
Jim: I find that people who have English as their first language can do pretty well on their own. Usually they won’t consider you for a loan mod if you are current, but when you file bankruptcy then they are supposed to consider you for a mod even if you are paying on time. I often see interest reductions; principal VERY rarely. If you want to bring in someone to help you, I guy I’ve heard some good things about is Fred Lear. He operates as Vantage Negotiation Services. Lear is a former loan officer. His phone number is 703-447-8571. He told me that he collects his when the loan mod is approved. That kind of integrity is VERY rare.
Tony
Thanks a ton for the reply, it really helped me….
Jesse
Mr. Weed, first let me say your blogs are awesome – this has been a very helpful website.
Now… My Question: I filed for Ch7 in Jan 2011 and it already discharged. I included my mortgage in the BK and the debt was not reaffirmed. We never made a payment and essentially walked away from it – its been almost a year now and my house is getting ready to be auctioned, and sold at a foreclosure auction. Question is… will that foreclosure show up on our credit report, or is it best to try to do a Short Sale on the house so that our credit report reflects the “short sale” instead of the “foreclosure”…. that is to say… “IF” one of those will show up at all, due to the debt already being discharged. I guess my second more basic question is will anything (Foreclosure or Short Sale) show up on my credit report post BK7 discharge?
We are in AZ.
Thanks,
Robert Weed
Your credit report SHOULD just show bankruptcy and nothing after that. However a future mortgage lender will know there actually was a short sale or actually was a foreclosure. Your ability to get a mortgage again in a few years is better if there was a short sale rather than a foreclosure. Whether its enough better that it matters, I don’t know. You should talk to a lender in your area if you are planning to buy again in a few years.
Carol
Hello Mr. Weed, My husband and I were forced into bankruptcy due to unsurmountable medical bills. As a result we filed for BK in Oct of 08 with the discharge in Feb of 09. We did not reaffirm our mortgage. We have made every payment on time and expect to continue to do so. We are not upside down because we had a conventional mortgage and bought a “fixer upper” in 2004 at a low price (3600 sq ft for $107,000). We put 22% down and have done all of the upgrades and improvement work ourselves. The most expensive upgrades (kitchen and master bath, landscaping and house painting) have already been done and were paid for prior to the bk. Here are my questions:
What happens to our equity if we sell the home for a profit? Do we lose our original down payment because of the bk? Do we pay the bank the balance of the mortgage at the time of the sale? Will prospective buyers know that we don’t own the home? Do we need the bank’s approval to sell?
Our home is zoned commercial and is a victorian in a river front town. What if, instead of selling, we want to turn the home into a bed and breakfast? Would this affect the mortgage or our equity in any way? Obviously, there would be tax implications if we run the B&B, but is there anything else we should know before pursuing this avenue with regard to the bank, our mortgage, or the bk?
Robert Weed
On your longer question, after the bankruptcy you STILL own the home–just like you did before if the bankruptcy court didn’t take it and sell it, which I guess they didn’t or you wouldn’t still be living there. Everything between you and the bank and the zoning is the same as it would have been if there never was the bankruptcy. There is only one difference. If you move out and just don’t pay, the bank cannot come after you for the money.
Debbie
I filed chapter 13 in 2009 on only credit card debt but excluded my house and car. I had financed my car at a 21% interest rate just prior to the filing. I am 3 years into my repayment plan on the credit card debt. I was hoping to refinance my car at a lower rate to lower my payment which my attorney said the judge would likely approve. However, my credit score is so low I am unable to do so. The 3 years of timely payments I have made on my car do not show and the finance company is reporting the status as “discharged in bankruptcy” on my credit report when it was not included in the repayment plan. I disputed it a couple times to no avail and called the finance company directly who said they are reporting the information accurately. Is this correct that a consumer who files chapter 13 and is repaying their debt timely as well as all other debts outside of the plan and receives no credit until the bankruptcy is discharged? This seems unfair and defeats the purpose of even trying to rebuild your credit.
Robert Weed
I totally agree with you. Chapter 13 is terrible on your credit. The credit bureaus sent out instructions in December 2009 to try to fix that, but too many creditors aren’t following them. You would have much better credit today if you had been able to file Chapter 7, instead of paying that credit card through Chapter 13. I’m waging a lonely fight on that here in Virginia.
Go to the National Association of Consumer Advocates website naca.net and try to find a credit report lawyer in your state who would be interested in suing the credit bureaus and the car finance people on this. If you find a lawyer who is interested, have them get in touch with me.
Harold
I have a real stumper and I can’t seem to find an attorney that knows the answer. The basic question: after chapter 7 bankruptcy if I choose to surrender my house that was discharged (not reaffirmed), is this a reportable incident to credit reporting companies (is it mandatory and/or permissible?) I am trying to buy a home. I kept paying my mortgage after bankruptcy for the last couple years. I plan to surrender the house but the mortgage company I am using to buy the new home has concerns that it will have a negative impact on the credit score. Can you point me to someone that can consult me on this?
Robert Weed
No. It does not legally get reported to the credit bureaus. Your credit report should show bankruptcy and $0 whether you have been paying or not; and that will stay the same whether you keep paying or not. HOWEVER, there will still actually be a foreclosure. and that foreclosure, although not on your credit report, will put off by two or three years your ability to buy a house. In a lot of places prices are low but rents are high. It MAY be that if you rent your house, you’d be able to buy a new one. Ask your lender.
Mike
Hello, Attorney Robert Weed
I been reading the comments and replys from you and they are extremely helpful. Thank you, My question is I and my wife had filed bankruptcy Ch. 7 in 2007 with a attorney and the bankruptcy was discharged. We didnot sign the reaffirming aggreement. After the bankruptcy we had checked our credit report in 2008 all debts were discharged and I did see a very good payment history with my Mortgage company because I was never late. I was paying mortgage timely prior to bankruptcy and up until now in 2012. Now I have few problems I can’t afford to pay anymore and also, I checked my credit report and my wifes both reports say under the mortgage company that this debt was discharged in Ch. 7 bankruptcy and there is absolutely no payment history anymore and also the unpaid balance is as 2007 when bankruptcy was done. But every year I do revcieve my mortgage statements with right amount and tax bills its been 5 years after the bankruptcy I been paying. I had put $30,000 down payment when I bought home in 2005 for $253,000. I only have one mortgage never refinace or taken out a home equity loan. Another problem I find out was Chase bank had put a excuetion lien trying to collect the credit card debt right before the bankruptcy discharged and also there was homestead act put on home by the attorney prior to filing the bankruptcy and Chase was mentioned in bankruptcy and was discharged. I donot know how they did this. The amount is $22,000. Was it necessary for me too pay the mortgage after bankruptcy then can I sell the home after lets say 4 months not paying and realtor sells it. What options do I have. Right now if I sell I will get between $245-250,000 because I do not want to loose my downpayment and this month will be 1st month miss payment. I dont understand why I kept paying after bankruptcy if was discharged. Im so stress don’t what to do. Please help with some ideas. If I buy a new home will I be approve at good rate and when I get new job both our credit scores are between 635-645.
Robert Weed
Let me try to sort this out.
If Chase put a judgment execution lien on your house–you said “right before the bankruptcy”–that could be kicked off. It can be kicked off if it was within 90 days of the bankruptcy being filed. (There’s another theory that sometimes works if it was longer than 90 days.) The judges around here will allow you to reopen the bankruptcy to take care of that. Talk to your lawyer.
The reason you kept paying the mortgage after the bankruptcy was so you could keep living in the house. The discharge means the mortgage company cannot come after you for the payment–but they can still take your house.
I think the credit report that shows no payment history since the bankruptcy was filed is the way they are supposed to do. May not always like it, but I think that’s right.
You are thinking of selling the house; and you have a pretty good credit score. If you can sell the house, I THINK you would be able to get approved without a long waiting period to buy again. (It sounds like you are looking at a smaller place.) Assuming your income looks good and all that. The bankruptcy back to 2007 should not be an issue.
(But if you just stopped paying and moved out; then you would NOT be able to buy a house for several years. Even though the foreclosure would not show on your credit report, the mortgage people would still know there was a foreclosure.)
You should talk to a lender in your area and confirm all this. I’m a bankruptcy lawyer, not a mortgage guy, I’m just giving you what I’ve heard and read and people have told me.
Mike again
Hello, attorney Robert Weed its mike again I have another quick question. I cannot afford to pay the mortgage anymore starting Jan. 2012 mortgage is with BofA. I’m going to put the house on market with realtor tomorrow cannot afford it no longer. Lets say i donot pay the mortgage until house doesnt sell, perhaps Jan., Feb., Mar., and someone buys in April. What will happen with BofA will buyer be able to buy the home with no problems. Should I let them know that they will get the mortgage balance when I sell the home until then cannot pay or just sell it without letting them know. Iam looking to buy right after smaller home. They cannot report anything on credit because the ch7 bankruptcy was discharged with BofA and should I pay my home insurance too until home sells and regarding chase with lien I donot think it should be a issue because on credit report does say discharged and I also have Homestead on home or will have take care of that 1st before selling home. I donot know Im stuck not enough income anymore wife lost job only I. I donot want to do a short sale or foreclosure because since bankruptcy things been like hell. Thanks
Robert Weed
If you can’t pay BofA and are hoping to settle up with them by selling the place–my vote is to tell them what is going on. But the real estate agent you get to help you sell probably known more about how would react to that than I would. Ask your agent.
michael reybok
my wife and i filed bankruptcy 2yrs ago and the mortgage still shows up as delinquent. we don’t live there any more. we have tried short sale but the banks are being so difficult. how can i get away from this house? besides the house going into bankruptcy we never missed a bill. we got really screwed by our lender when we bought the house 5 yrs ago and would just like to move on and purchase a new home. we don’t even live in that house anymore.
Robert Weed
Still shows up as delinquent–meaning it does not show bankruptcy? You need to do a fair credit reporting dispute. Then, if that doesn’t work, you need to find a lawyer in your state who does Fair Credit Reporting law and sue them. Try naca.net.
Mitch
I am having an ongoing battle with JP Morgan Chase bank regarding them reporting a forclosure on my credit record. They had written in the CREDITORS STATEMENT area: “foreclosure preceedings started”. I appealed through the credit bureau (Experian) however they did not remove it off the credit record. I also noticed they show the foreclosure as 9/2009, which is after we filed for Ch 7 and were completely current. We stopped paying 3/2011. I feel this is Chase’s way of trying to get it on the credit report somehow. However, by saying it was in foreclosure in 9/2009 is completely erroneous as we had never been late in 2009 and paid before, during andfor sometime afer the BK. Is putting the comments in the Creditors Statement and using the wrong date to indicate a foreclosure a violation of the Fair Credit Reporting Act?
Dorothy Lee
Hello. I have a question. First of all, my Chapter 7 Bankruptcy was done and cleared last January. I had no clue that my condo would show up as “discharged in bankruptcy” on my credit report or that my condo and car payments would not help me with my credit. My current credit score is 620. I have rebuilt some of my credit. With the market the way it is, I would lose money if I sold my condo. Like $20,000 in money. So… with the way this works.. if I were to apply for a loan for a new home, would the new lender be able to see, or count against me, the money that I owe on my current condo?! I know they probably can.. by demanding a statement from my mortgage company, but technically, I owe $0 on that condo because of my bankruptcy and no one can make me pay it! So can I continue to pay on the old condo until I close on the new house, then do a short sale or forclosure on the condo afterwards without being penalized for the debt on the old condo?! Specifically, will the new lender deny my loan because I have too much outstanding debt because I already own a condo even though I really have no financial obligation to pay for that condo? Any help would be greatly appreciated.
Robert Weed
I’m told that the way to get where you are trying to go is to rent out the existing condo–have a tenant and a written lease and all that–and then three years after the bankruptcy you should be able to get approved to buy a house again, while you still have the condo. After that, you could do a short sale or a foreclosure, or just keep it rented. I know that works for some people; I don’t know how often.
Matt Woodward
It was never explained to me by my lawyer what happens after your Chapter 13 is discharged.
I financed my home through Countrywide. While in Chapter 13 my first and second mortgages were sold to Bank of America, who later sold my second to Green Tree in 2010. (I just found this out last week).
My Chapter 13 was discharged last October. When I got the letter of discharge I called my lawyer and asked how I go about making my self payments to Bank of America since I’m not receiving bills from them. She told me to call them and have them resume sending me bills.
I called Bank of America and was told that they hadn’t received a letter of discharge from the state yet and couldn’t send me a bill and I was not required to make payments.
The way they made it sound, was that I didn’t have to send in payments until they received the discharge letter from the state and I believed them. I called them every month to see when I could get a bill to resume payments and kept getting the same explaination.
Last week I got a call from Green Tree saying I was 4 months behind on my second mortgage for $7500 and they wanted to settle for a lump sum payment of $5000 by the end on Feb. I asked what they were talking about and was told my second mortgage was sold to them in 2010 and I was sent a letter at that time (I never received the letter, or at least it may have been thrown away as junk mail by my Wife). I told them I had never received a bill from them and was told they don’t bill. They said Bank of America sends the bills and pays them when they get paid.
I called Bank of America and told them what Green Tree said and asked if I was behind on my payments. They told me I was 4 months behind. I asked if I could catch up on my late payments to get current and was told yes. I asked how much do I need to pay to get current and was told they couldn’t tell me because I am still protected under Chapter 13 and I would have to contact my lawyer to find out.
A day later( yesterday) I received a 2011 Form 1099-C Discharge of Debt on my second mortgage from Bank of America.
I’m waiting on my lawyer to call me back, but I have a feeling it’s too late and I’m going to lose my house. I have the money to bring both accounts current, but Green Tree say’s it’s not an option. They want $5000 by the end of Feb and Bank of America won’t tell me how much I need to pay to get current.
Robert Weed
First of all, there’s a lot of weird stuff going on. It’s very strange that the mortgage companies five months after your bankruptcy was discharged still think it is going on. And its weird that when you called them to make payments they told you not to. Doesn’t make sense. They should have known they weren’t getting paid.
It’s also strange–maybe in a good way–that you got a 1099-C from Bank of America. If they cancelled your debt–and they say they did–then you don’t owe Greentree any money. (There is a way to use Chapter 13 to knock the second mortgage off the house. It depends on the house being worth less than what you owe on the first. Did your Chapter 13 do that? I can’t tell from this distance.)
The one thing I know is that Greentree cannot refuse to allow you to catch up your payments. That’s just BS. (It might also be a Fair Debt Collection violation to say that. But compared to figuring out what’s happening, that’s a side issue.) You are not in danger of losing your house. But what you really need to do, I’m not sure. The pieces are not fitting together. Stay calm and take the time to go in and talk to your lawyer. Maybe you can sort it out.
Nicole W.
I filed chapter 7 four years ago. I have never ever been late making mortgage payments since I bought this home 8 years ago. Last summer I fell behind on payments for 3 months. I did reaffirm my loan after the bankruptcy. I want to move out and purchase another home. I been making regular monthly payments but I haven’t paid the past due amount that I fell behind on. Would it be a good idea to just sell the house? If I sold the house for what it is worth, would I be help liable for the remaining portion of what is owed on the house. Would a lender even finance me for a new mortgage? I feel stuck here!
Robert Weed
You what?! You say you reaffirmed the loan “after the bankruptcy.” I hope that means you just kept paying. But if you reaffirmed–you signed a reaffirmation paper and filed it with the court–then the bankruptcy does not protect you. You need permission from the lender to do a “short sale” to sell the house for less than its worth. Often, depending on the market, they will agree that you don’t have to pay any more money. Sometimes they won’t. Sometimes they hold you liable.
You need to go back to your lawyer and really find out if you reaffirmed your mortgage. That is almost always a terrible idea–you are an example of why. I hope your lawyer didn’t let you do that.
Mitch
Sorry to repost but I was hoping I could get a little more information on the FCRA. I am having an ongoing battle with JP Morgan Chase bank regarding them reporting a forclosure on my credit record. They had written in the CREDITORS STATEMENT area: “foreclosure preceedings started”. I appealed through the credit bureau (Experian) however they did not remove it off the credit record. I also noticed they show the foreclosure as 9/2009, which is after we filed for Ch 7 and were completely current. We stopped paying 3/2011. I feel this is Chase’s way of trying to get it on the credit report somehow by including it in the comment section. However, by saying it was in foreclosure in 9/2009 is completely erroneous as we had never been late in 2009 and paid before, during andfor sometime afer the BK. Is putting the comments in the Creditors Statement and using the wrong date to indicate a foreclosure a violation of the Fair Credit Reporting Act? What do I do now? Experian has indicated they have verified the data but there is NO way it is accurate, we made every payment up to 3/2011.
Robert Weed
It’s time to talk to a lawyer in your state who does Fair Credit Reporting law.
John
Wow great article and great follow up Mr Weed, even on comments months later. I wanted to say im here in Richmond VA and several years ago filed Chapter 7. As far as i know my house, which was set up as an 80/20 loan was included. Ive been paying both loans since to stay in my house as told by my lawyer. I noticed a couple times that you have mentioned something about second loans being written off or taken off of homes. Is that something that might be able to happen for me? I know that if I did not have that second loan payment in a month things would be so much better. The first loan is currently @ 102k and the second is @21k I think.
Homes.com says value of home estimated @ 124k
Thanks
John
Robert Weed
I think you PROBABLY want to keep paying that second. I recommend not paying when the value of the house is well below what you owe on the first. If you think the Homes.com value is about right, then somewhere over the next few years, you’d be in danger of the second foreclosing you. Now if your youngest is maybe 16 and graduates from high school in June 2013, then maybe you take that chance. But if you want to hold onto the house longer than that, I’d be nervous.
(Now lawyers are paid to be cautious. You might just not pay and see what they do. But you’d be a bigger gambler than I am. )
Kim
Hi Mr. Weed. I have a question on my Chapter 7 bankruptcy. My settlement/discharge was in 12/2006 and I have worked hard rebuilding my credit. However, I have two items on my credit report, one from US Bank and the other from WFFinance. They both have appropriately zero’d out the account balances and the reporting status is “Debt included in or discharged thru Bankruptcy” but they did not wipe out the 24 month payment history like all my other accounts included in the chapter 7. Can I request legally that they remove the 24 months they’re continuing to report? If so is it US Bank and WFFinance I contact with that request or do I work through the credit reporting companies??
Thank you in advance for your expertise!!
Kim
Hi Mr. Weed,
It was chapter 7. The 24 months of payment history was before the bankrupcy and after. Both USBank and Wells Fargo continued to report late payments and account activity on my credit report as long as a year after my filing date. We filed on 12/05/2006 and both accounts show late payments into 2007 even though they have the acknowledgement statement in the status that the account was included in the bankruptcy. In the case of US Bank they’re showing the repossession on 12/06 (the month our case was filed) and continued with “key derogatory” reports for the following three months. Can I ask them to removed the December posting since we filed on the 5th and can I make them remove all the other months 01/2007 forward?
Thanks!
Robert Weed
You are right! they should not show any late payments into 2007 if the bankruptcy was filed in December 2006. Getting that fixed would help your score a little bit. You need to do a Fair Credit Reporting dispute. Under the FCRA, your right to dispute is with the credit bureaus–although it doesn’t hurt to send a copy to the creditor. Tell them what you want. And see if they fix it. Send it certified and keep a copy. If the first letter doesn’t work, send another one. If two don’t work, go to NACA.net and find a Fair Credit Reporting law lawyer in your area.
Dan
Mr. Weed i filed chapter 7 three years ago i never reaffirmed the loan but i did get a loan modification which i’m surprised they gave it to me. My question is will the loan modification have any affect on me if i walk from my house is the loan modification the same as a reaffirmation.
Thanks
Robert Weed
Dan. Don’t worry. The after-bankruptcy loan mod does NOT reaffirm your mortgage. You can still walk away from your house and they cannot come after you.
(You should NOT be surprised that you got a loan mod after bankruptcy. It happens all the time.)
Ken
Mr Weed, I filed Chapter 7 and discharged in September 2010, I was under the impression the house was not part of the BK but it was. We did not reaffirm, and have been making payments since the BK. A few months ago with Tax & Insurance increases there was a an escrow shortfall along with a bump in interest on the 2nd mortgage, increasing the payment on both loans $400 a month. Well i was having trouble keeping up before the increase so this was not good. I called the Mortgage company to see what could be done and they spread the escrow shortage over 2 years instead of 1. On the 2nd mortgage they modified the interest rate for 2 years to make payment lower. If i can’t continue to keep up is that modification like reaffirming or am i still protected if i walked away. It’s the same loan they just lowered the interest rate. Thank for any info Ken
Robert Weed
Ken. A loan mod is not a reaffirmation. You can still decide later to move out and they cannot come after you. The bankruptcy still protects you. I’ve been getting this question a lot, so it’s the topic of my most recent blog. https://robertweed.com/blog/after-bankruptcy/does-bankruptcy-still-protect-me-if-i-get-a-loan-modification/
Jason
I just filed for Chapter 7, and my attorney has advised they I just pay as agreed for my house and car. I am married, but it is only me filing. The car is only in my name and the motgage is joint. I have the understanding that I can continue to pay the car and not credit for actually making payments on my credit file, but how will this work on my home loan. If we continue to pay, will it show bankruptcy on my report with no payments, and paying as agreed on my Wifes reports? Is there any cross over where she gets effected. in three years we plan to refinance to drop PMI and lock in a lower rate on an adjustable loan, and we may just deed to her solely and refi with her on the loan including my income (if that is even possible).
Robert Weed
You are correct. The house and the car should show bankruptcy and no payments on your credit report; and they should show current, pays as agreed on your wife’s. They make mistakes on that some of the time, so you should check.
Stephanie
After filing Chapter 7 and continuing to pay on our discharged mortgage, at the end of the loan (when the loan is paid), will we have trouble claiming the home as ours? We do not want to leave our home/foreclose/short-sale, we want to continue paying but we also want to own our home in the end.
Robert Weed
As long as you keep paying, you get to keep the house. When it’s paid off, then you get to keep your paid off house.
John
So i went back and doublechecked, the amounts, the second is about 4k more, so as of right now, Im sitting right around the value of my home I suppose. But Im afraid to have them modify anything or do anything, which they wont do anyway at least as of right now.
Renee
My husband and I Filed Bankruptcy in 2007- was discharged Oct 2007. My husband has recently passed and I am going to have to let the house go. Never reaffirmed the 1st or 2nd mortgage. We have had a few “late” payments on the house since the bankruptcy and as I now think about it … those are on our credit reports. That should never have happened, correct? And payments also should not be there. Does it matter on my credit report about the “late” payments a couple of years ago now that I am letting the house go into foreclosure?
Robert Weed
Right. After October 2007, nothing should show but bankruptcy discharge. No payments, no lates, no balance, no nothing.
Jenny
I filed chapter 7 3 years ago. I have been living in my home any paying the mortgage. It is a usda rural development loan and I want to refinance. My current interest rate is 6.75% and want to try to refinance at 4%. Does this reaffirm my home loan? Would it be advisable even if it does? I have about $40,000 in equity in my house.
Thank you!
Robert Weed
Jenny: If you refinance with a new lender, then its a new loan and the bankruptcy would not protect you. If you refinance with usda then it’s not a new loan, and it’s not a reaffirmation, and the mortgage would still be covered by the bankruptcy. Since you are telling me there’s $40,000 in equity, it looks like you’re keeping your house for the long term, so I see no reason to worry either way.
Elizabeth
Hello Mr. Weed,
My husband and I filed bankruptcy in 2005. All history of bankruptcy will begin to slowly come off our credit reports this year. We just figured out that we are not liable for our mortgage, it has not been reported to the credit bureau for the last 7 years and if we want to have it reported we need to file for an affirmation. However we were under the impression that we were stuck with an upside down loan and no where to go. With this new found information we feel such a relief. However my question is “are we liable for the taxes on our home?” Our taxes our bundled with our mortgage payment and insurance. And how long do we have before they file the home as a foreclosure and how long after that to move out?
Robert Weed
Elizabeth: In Virginia, I would say five to ten months after you stop paying before you get a foreclosure; and you should be ready two move within a few weeks after that. Here’s the advice I have for people. https://robertweed.com/blog/after-bankruptcy/file-bankruptcy-stop-paying-dont-leave-that-house/. I don’t know where you are, but it’s not likely to be quicker and could be a lot longer.
As to the taxes, usually the mortgage company will keep paying them, again here in Virginia. Recently I’ve seen a couple instances where they didn’t and the county came after the homeowner. https://robertweed.com/blog/virginia-bankruptcy/bankruptcy-and-real-estate-taxes-counties-are-desperate/
MsKAH
Hello. I filed a Chapter 13 in May 2011. I just pulled my credit report to make sure all my debts say, “included in Chapter 13.” Well I discovered some of them that were included in my Chapter 13 don’t say that, plus they are still reporting me as “past due” to the credit bureau (as recently as Dec 2011). When I called one of the collection agencies they said that my account is suppose to show the balance and a “past due” amount. I thought all of my debts should say, “Zero Balance and Zero Past Due.” Could you advise me as to what my debts should say on my report. Thanks
Robert Weed
I agree with you. So does Bankruptcy Judge Sue Kelley, in Wisconsin. So do the credit bureaus (!), when sent out instructions in December 2009. We all say that if you are making your Chapter 13 payments, the creditors have to report you as current.
However, my bankruptcy judge here said, no, those people are all wrong. If you are in Chapter 13, you SHOULD be reported as late. I’m trying to get in front of a different judge and trying to get a different ruling.
So, right now, I don’t have a lot of encouragement to offer. You can ask your bankruptcy lawyer if they are interested in taking this on. I’ll kick in as much as I know.
RJT
Hi Mr. Weed,
My wife and I filed Chap 7 in Oct 2006 after reading about the law changed coming into effect with respect to credit card companies being able to raise interest rates if consumer was delinquent on ANOTHER card. We were overextended with our 2nd child on the way and the writing was on the wall that the change in the law would create a domino effect and cripple us financially.
We had a primary & secondary mortgage w/Wells Faro (5.25%/variable) and although we indicated our desire to reaffirm our mortgage to our attorney and Wells Fargo, it never happened prior to the filing being closed in March 2007. It was only months later that we learned WF wouldn’t reaffirm a debt that was delinquent (although current on the primary, we were behind a few months on the 2nd).
We have worked hard to improve our financial position and have had no late payments of any kind in 5 years. We have a strong desire to get our mortgage back on the radar as we believe it would greatly help our FICO scores (my recent # were 679/697/699). We contacted WF and they told us we qualified for HARP and that they would refi our 1st at 4.25%. However, the 2nd would remain as is. We thought this was a done deal but last night were contacted by WF and told that since the loans were not reaffirmed, we didn’t qualify for HARP. On top of that, they said there was no desire to refi both loans. [WF didn’t do an appraisal but estimated our house at $356 (we owe $312). We don’t currently pay PMI and, using WF’s #s, the LTV is 89% so refi on both would probably bring PMI back.]
I have asked WF if they would confirm that they would allow us to reaffirm if we reopened the filing and then go ahead with the HARP on the primary but haven’t heard back yet. We live in central NJ, with excellent school districts, intend to stay here for several years and believe home prices have probably stabilized more than most areas.
Question:
Based on the above, do you think reaffirming the 1st/2nd is wise?
Assuming we had an appraisal at $400k (80% LTV), do you think it likely we could find another mortgage provider with the bankruptcy history (I am fully employed 16 yrs. @$175k per, wife PT at $26k)
The 2nd is currently at 3.99% so our combined mortgage comes out to about 4.12%.
The refi of the 1st wouldn’t have locked in the 2nd variable rate but would have a) lowered rate by 100bp, b) lowered monthly pmts @$350 and c) got our primary pmts into the credit bureaus.
Any advice or guidance would be appreciated.
Thanks
Robert Weed
I’m a bankruptcy lawyer, not a financial planner, so let me answer the legal question first. The law is clear that you CAN’T reopen a closed case to do a reaffirmation. Some judges somewhere may allow it–s I’ve heard–but few. You could ask your lawyer if the judges there do. If they don’t, that answers that question.
I do think you should shop for a new lender. Your credit scores look good to me and it’s definitely more than three years since the bankruptcy. So, see if you can get a better deal than you have now–and if you do, take it.
Rather than looking backwards at the bankruptcy–five years ago. Look forward. Shop for a loan.
RJT
Thanks for the prompt and clear response! Very helpful site! Best regards
Lopez
Hello Mr. Weed,
I live in MA and was discharged under chapter 7 last year. I closed my LLC business and open a new one right after. I consulted if it was legal to keep the same name but under a cooperation (INC) and i was told that it wasn’t a big deal. well now I have a debtor that I included on my bankruptcy and hes trying to sue me giving the judge the idea that i have committed fraud because i use the same name just changed from a LLC to INC. The LLC was dissolved and I was discharged. What should i tell the judge to dismiss the case?
Thank you for your help.
Regards,
Tito
Robert Weed
My comments on that way you should have handled this are here. https://robertweed.com/blog/virginia-bankruptcy/do-i-need-a-business-bankruptcy/. Don’t know who told you “it wasn’t a big deal” to keep the same name, except Inc instead of LLC. I would have told you it was a big deal.
Patricia Wavra
Hi Mr. Weed,
My husband and I filed Chapter 13 bankruptcy a year and a half ago. In November, my husband walked out on me and I plan to move to another state in June of this year. He wants a divorce and to move on. I asked him if he was moving back into the house when I left and he said he didnt know and that he should just let go back to the bank. So I decided to not pay the rent. I received a letter saying I had 10 days to pay the late rent or they will take legal action. How long do I actually have until they can kick me out of this house??? My son is graduating in June and thats when we plan to move across the country. Can you help me???
Robert Weed
Patricia: Laws about rent are different in each state. But most places, they can kick you out fast. If you had a mortgage and just stopped paying in February, I’d say you’d probably be safe moving after your son graduates in June. Since you are renting, my guess is you don’t have anywhere near that long.
Kimberley
Hi Mr Weed,
I filed for bankruptcy in November of 2010 and it has been discharged. My house was included in it. I had a home equity loan with my credit union that was included in the bankruptcy. That was charged off.
My attorney said that since I included the home equity loan in this action that I could not do a loan modification on my house or the credit union would re-open my loan for me to pay them off as I originally agreed.
I would like to save my house, but am getting conflicting information on this. What if I went for a loan modification? I have not heard from the mortgage companay about foreclosure action since I stopped paying them at the same time I filed my bankruptcy! They have send coupons to pay about June of last year (2011) and have even sent out a letter dtd January 2011 saying that they were forwarding my file to a counselor. I have only received mail, early last year (2011) from an attorney representing them about the bankruptcy, and thats been it. I do not know what the mortgage lender is doing with my loan! I called to alert them to a phone number change and no one directed my call to a collector or anything! Maybe I am afraid to ask questions and revive any legal action that they are going to take?
Id love to save my house. What are my choices based on what I have shared?
Thanks
Kimberley
Robert Weed
Hi Kimberley:
I think you should go for a loan modification. You haven’t told me about the value of your house, but if it’s dropped well below what you owe on the first, then the mortgage company might be very interested in giving you a mod. In those cases OI recommend just not paying the second, with the credit union, at all for several years. Then if the value is still low, see if they wll release their lien if you offer them ten cents on the dollar.
My blog on all this is here. https://robertweed.com/blog/chapter-7-bankruptcy/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/. You can read all the comments of over a hundred people, sharing their experiences.
Kevin
Mr. Weed,
First and foremost, FANTASTIC SITE!!!! Let me explain my situation. My former partner and I purchased a condo together back in December 2002. In Jan 2006, I fiiled CH7 BK and was discharged in Jun 2006. The mortgage, with GMAC, was not reaffirmed as part of the BK. In Jan 2009, my partner and I split up and he moved out to his own place. Since then, it has been difficult to keep up with all of the monthly expenditures at the condo. Late on mortgage and placed it on the market back in Dec 2012. I have since moved as well to more affordable housing and condo currently sitting on market with an interested buyer. Realtor is taking this as a short sale and currently has their legal team working with GMAC to get the short sale request approved. My question is, with this scenario, would GAMC still have the authrority to request financial documentation from me as part of the process, since I filed CH7 and included the loan in it? Thank you in advance for your response.
Robert Weed
Kevin: Yes they do. The cannot come after you for the money, but they still have to approve the sale. You can move out (you now have) and they can’t come after you. They they sitll can hold out for what they want if you are trying to sell it. (I hope you are paying the condo associaiton; you need to keep that up until there’s either a shortsale or foreclosure.)
John
Mr Weed,
Well so i wanted to contact you again. . so my situation is Chap 7 filed and still paying both parts of my 80/20 mortgage to say in house. Just got my 2012 Tax Assessment by the state and the townhouse is now worth 106,400 where I owe more on both amounts total together . the first by itself is more than the what is worth. My goal was to stay in the house as long as my daughter is in school. Long way to go. Shes only 10.
Not sure if that changes anything as far as the second loan goes.
John
Richmond VA
mike
i filed ch 7 in 2004 .. my home is with citi and i told my att. i wanted to reaffirm the house. Citi hasnt reported any payments since filing and after pulling my own credit report citi shows account as closed .. After calling them they told me that they didnt get the reaffirm papers. Can i walk away from this home. I have made all payments on time since filing ch. 7 but now my foundatoin has shifted badly and will need 20000 to repair a 65ooo home. Citi is very rude and wont talk to me much. If i can i would like to walk away. can i ? thanks so much in advance. It is just me and two little boys in the home and having mold problems and lung issues wih my 9 year old that may be related.
Robert Weed
Mike:
Yes you can! Aren’t you glad you didn’t reaffirm.
Single Mama
I am in a tough situation. My Ex husband filed Ch7 and will be out of it on March 23, 2012. My ladies and I are still living in the house and I have been making $1240 payments on time. I’m no longer getting child support so money is REALLY tight. With us being divorced, how will me walking away from the house affect me? Or can I walk away?? He never reaffirmed the house. My mortgage is with Citi and the lady said that it would take 30 days just to get the form to his attorrney, then we all have to sign it…well…his attorney is in FL, he’s in Nevada and I’m in Tx! I really want to just walk out the door and run….he’s put me so far into debt I just can’t take the house payments anymore but I don’t wan tmy credit ruined either. Please help me!
Robert Weed
Single Mama: Your credit was ruined when he moved to Nevada and left you and your girls there in Texas. You need to worry about survival; talking to a bankruptcy lawyer and finding out your options is one thing you should do.
Single Mama
Ok, but am I still responsible for the house? Both of our names are on the mortgage loan but he was the only one that filed bankruptcy after our divorce.
Anthony
I filed chapter 7. My court date is 03/08 and I am on the fence about re-affirming both my 1st and 2nd. I purchased my house in a seasonal community in NY. I owe 119k on the 1st and 68k on the 2nd….sadly the value is 65k….I know, the area has tanked. I do not plan on dumping the house and would love to hold on to it. I want to continue paying the 1st. The 2nd I am debating on whether not to pay and hope for a settlement. Thoughts?
Robert Weed
Anthony:
If I were your lawyer, I would not be on the fence. Why on earth would you reaffirm $187,000 in debt on a $65,000 property. That guarantees two things: you will be poor for the next eight years; and the end of that time, you’ll be filing bankruptcy again.
ASH
Hi here is my situation. Charter 7 discharged in jan 2011. Kept home but did not reaffirm. Wife lost her job now we want to go rent. Since the mortgage is not being reported as current if I stop making payments will that show up on my credit report? Is short saling better then foreclouser in California after bankruptcy? Will both other of those show up in my credit if I let this home go? What about a dead in Liu? Please advise.
Robert Weed
Ash:
Whether you pay or don’t pay, your credit report should only show bankruptcy. Changing from paying to not paying doesn’t change the reporting–it will still show bankruptcy. Your ability to buy again sometime down the road is better if you work with your lender to do a shortsale, rather than an after bankruptcy foreclose. (Although it does not affect your credit score.) I have no idea how deed in lieu works in California.
Chuck
Situation is this Bk discharge Aug.2010 house not reaffirmed now upside down $65k. Doing well have credit card with manageable debt want to purchase new home but don’t have 65k to sell this one. If I purchase new home and walk from current home how will that effect my credit? Will it show up as foreclosure or should I short sale it? Is there a lesser of two evils and will it show on credit report as new or back dated to bk filing date?
Thank you
Robert Weed
Chuck:
There are two separate issues. Your credit report and credit score are the first issue. Your mortgage on your house should be showing BK 2010, and nothing after that. Nothing if you pay, nothing if you don’t pay; nothing if you walk away. Your ability to get car loans, credit cards, that kind of thing reflects the good credit you’ve been building up since 2010 and what you do with the house won’t matter.
BUT your ability to get a mortgage is different. It is affected by what happens to the house. And a foreclosure, even if it does not show up on your credit report, is still a foreclosure and it will hurt you. A short sale will hurt you less.
In a lot of places, housing prices are low, but rents are high. Could you rent it for break even? I’m told by some people that the easiest way to get approved to buy a new house in your situation is to have the old house rented.
You need to talk to a lender in your area.
(I also think with a 2010 bankruptcy discharge, it’s still too early to get a mortgage approved, exasperated from the problem that you still have the house. But go talk to the mortgage department at your bank and see what they say.)
phephe
Hello. I’m in the process of starting chapter 7. My lawyer said that if I keep paying the mortgage after its discharged that I can keep livin here. He said that I will not receive bills anymore but if I keep payin, I’m fine.
Questions are: Do I still pay the taxes, pmi, and insurance (I’m assuming I will but wanted to ask)? if the mortgage is discharged, how late can I be before they foreclose? If I’m less that 30 days late can they take the house? also if I pay the whole amount off I will own the house?
Robert Weed
Phephe: Listen to your lawyer. If he says after bankruptcy you can keep paying the house and keep living there, then listen to him.
After your bankruptcy all the big things will be the same, except that YOU don’t have to pay. (If you don’t pay, they can take the house, but they can’t come after YOU.)
You sill have to pay the taxes, pmi and insurance, if you want to keep the house. They still have to go through all the steps of foreclosure if you stop paying. (Not 30 days but more like three to six months most places.) And if you pay off the whole amount, you will own the house.
There are people out there who think bankruptcy is some kind of punishment or nightmare. (Usually these are people who should file bankruptcy themselves but are too stiff-necked. They think that just not paying on time is somehow better than bankruptcy.) Those people imagine all these bad things that must happen after bankruptcy. Sounds like you are talking to one of them.
Believe your lawyer.
phephe
also, can you request that the payments you continue to make on house after chapter 7 be included in credit repost by contacting the reportin agencies? The mortgage company doesn’t report it unless you reaffirm, but I read somewhere that you can add those payments yourself by calling the agencies.
Robert Weed
Phephe: Sometimes I’ve had people try this. Write to the mortgage company and say it is a “qualified written request” under RESPA. Ask for your payment history for the last two years. They are required to send it to you. Then send that with your letter to the credit bureaus and ask them to update your credit report to show the payments.
I don’t know for sure that works, but I’ve had people try it.
Megan
Can you get a home equity loan after bankruptcy (if u keep paying the mortgage payments). Also, how about if u make a profit when selling your house, can u keep the money? One more- how about ever refinancing with another company, is this possible?
Robert Weed
Megan:
Can you get a home equity loan after bankruptcy? Sure, if someone will lend you the money. You need to build back to good credit–that will take several years. And you need to have equity. They don’t make home equity loans any more to people who don’t have equity. Most places home values are still going down, so home equity loans are hard to find. (Why do you want to do this? There may be a good reason, but the purpose of bankruptcy was to get OUT OF DEBT.)
If you make a profit when you sell the house after bankruptcy–yes the money belongs to you. You can keep it. Some people I worked with recently made a $150,000 on selling a house they filed bankruptcy on a while ago–but that was VERY unusual. Eventually values will turn back up and the equity in the house does belong to you.
Refinancing with another company? Sure. Same thing, you need good credit. And you need to have equity in the house, so that they would WANT to lend money against it. They’d want to see the house was worth safely more than you owe on the loan you are refinancing.
Anthony
Thanks for the reply dated March 2nd. My attorney is telling me that I should re-affirm the 1st and not only not pay the 2nd, but to NOT re-affirm it. According to her….if I plan on keeping the house, I should re-establish myself being that I can afford it now that the BK has cleared all my toxic debt. She agrees that the 2nd is waste and to work a settlement years after. Even more confused….at the end, it will be my choice. Not affirming makes sense to me as I continue to read your blogs.
Pat Morgan
Robert Weed:
I filed BK7 a year 1/2 ago, but just found out that my home was included. All along I had been paying and now my question is can I move out? And if so, how should I do it? I need funds for moving and also deposits etc. how should I go about this? Should I contact the bank first?
Robert Weed
Pat:
Sure you can move out and they cannot come after you for the money. That’s what the bankruptcy did. First stop paying and see how long you can live for free to get some money together to pay for the move. Here in Virignia you’d probably have five or six months–most other places would be longer.
It would be polite to contact the bank? Should you? That’s a harder question.
Cynthia
We had a bk chpt 7 in July 2008, the house was included but we wanted and remained in it until 05/2010. We never reaffirmed the loan. But we opted to have a short sale to get it out of our name. The house did not sell until recently, 03/2012. We are thinking of buying a new home sometime in the next year or so. I know you have to wait for 2 years after BK. But 3 year after a short sale. Which one applies. Can we buy a house next year since our BK was discharged in 2008? Or do we have to wait 2 years after the short sale date of 03/2012? I have no unsucured debt, I have 2 vehicles, that I bought in 2009 and 2011, I am almost done paying off 1 vehicle. My husband was in the Navy so we have the VA Loan we did not use the first time. Can we buy a house in the next year or do we have to wait until 2014?
Robert Weed
Cynthia:
I think the waiting period runs from the short sale–even though the BK was earlier. But there may be special rules for people who have VA eligibility. You should ask a mortgage lender in your area.
Confused IndyGirl
Hello Mr Weed,
We had our bankruptcy disharged in July of 2009. We did not reaffirm our mortgage, but continued to make payments per the advice of our attorney. Now, it’s nearly three year laters and we are looking to buy a home. We’ve been approved for an FHA loan, but now our new lender is saying I need a letter from old lender that we do not have financial obligation to the home. Our old lender won’t do that, and says I need BK lawyer to provide that. BK lawyer said everything is listed in discharge papers which our new lender has. I’m confused because our new loan had come out of underwriting, has a locked rate, and now our new lender is saying underwriting wants this documentation because they are concerned we are bailing on our home. Should we be concerend now that we are a week from closing this isn’t going to happen?? I’m hoping this is something you’ll have an answer for!
Thanks
Robert Weed
Confused:
I do not have an answer. I think as long as you still own the house, you can’t get approved–so you are further along than I would have thought you could have gotten. I’m surprised they didn’t tell you no way when you first applied.
UNLESS, you go back and rent the place–since you’ve kept it current. I’ve been told by some people that solves the problem.
Stephanie Nafus
Hello, Mr. Weed. I filed Ch 7 BK last year and it was discharged already. Previous to filing, I was able to modify my mortgage payment to a very low interest rate and have since made my payments on time for fear of losing the home if I were to become late on the modification. My attorney tried very hard to obtain the reaffirmation agreement from my lender, Chase, prior to the discharge of my BK, but we were never able to obtain it so as it stands now, I never reaffirmed and am making payments on time. I am now in a position where I am struggling to make these loan modification payments and am wondering what the lender can really do to me in regards to taking the property or starting a foreclosure process if I am get 30 days behind (which I think will probably happen this month). I don’t have equity in the home, I am most likely just slightly upside down or owe about what it is worth, so I could not sell it.
Robert Weed
Stephanie:
Aren’t you GLAD your lawyer did not get those reaffirmations. Then you’d really be in the soup, like Michelle.
You have two big choices. Keep paying the first and stop paying the second. See my blog on that. https://robertweed.com/blog/chapter-7-bankruptcy/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/ If you had reaffirmed the second mortgage, you couldn’t do that, because they’d call day and night, sue you and garnish you. Because you didn’t, there really isn’t much they can do–until the values come back enough that it’s worth it for them to foreclose from the second mortgage.
Stop paying everything and keep living for free until they get around to foreclosing you. Here in Virginia that would usually be five or six months. Most other places it would be longer. When they do foreclose you, they get the house but they cannot come after any money from you. That’s why you are glad you didn’t reaffirm.
Also, you could try to see if they will agree to a shortsale. It’s not clear to me that benefits you in any way.
michelle
Love your site!. Question.. I filed and bk7 2009, told by atty I wanted to reaffirm my 1st and 2nd mortgage. He only reaffirmed the first. I asked what would happen if we didnt reaffirm and he said he wouldnt suggest it, but then only reaffirmed the 2nd and not the first.. did not realize this until I checked my credit score a few month later. As you I am sure are aware, housing prices have gone down. My house appraised 50,000. I owe 85,000 on first and 32,000 on 2nd. I have never been late on payements (not that it helps the credit score) but, I would love to leave citibank 2nd mortgage but keep my first current. What are my options? I am affraid their aren’t any and I am forced to pay the 2nd regardless of whether I walk away or stay.. Your advise would be extremely appreciated. I am not sure what type of lawyer to see? Thank you
Robert Weed
Michelle:
Are you telling me your lawyer let you–or told you!–to reaffirm the second mortgage. Are you sure? You say you know that from your credit report but have you looked at the bankruptcy court docket? Gosh! I hope that’s not true.
If that’s true, you or your lawyer kept you from doing exactly what I tell me clients, usually, to do. Keep paying the first and just don’t pay the second. You stuck yourself with the second mortgage regardless. (Not totally regardless; four years after you filed, you could come back with a Chapter 13–pay all the court thinks you can afford for three years and wipe the rest of it out. A drastic remedy, but maybe your best choice.) You might also see if you can get both mortgages to agree to a short sale; I doubt it but it’s worth a try and you are desperate.
You might also want to talk to a legal malpractice lawyer. Unless your BK lawyer has good records showing that he TIRED TO TALK YOU OUT OF REAFFIRMING, it could be legal malpractice.
michelle
Robert, Yes. I suggested that I would reaffirm the 1st and not the 2nd. He said it was quite a gamble and he would not suggest it. Never Never did he tell me if I didnt reaffirm I could keep paying the monthly payments and they would not forclose if I kept my payments up.. Never.. I feel so ridiculous now. I have to say going into bk7 there are guilty feelings and feeling of inadequacy that keep you from asking important questions because at that point you feel any help a lawyer could give you is like gold. I didnt think to question him as he was the expert.. not me… i feel so ignorant and taken advantage of now.. I know it has been since 2009. dont know if I even have the optoin of legal malpractice as it has been to long..
Paul
Mr. Weed: I was discharged from br ch 7 in feb 2010. I have modified the 1st and kept current. I have done nothing with the second. I since have moved and rented out my home. Today I want to keep it as an investment property as I pull in $500 profit a month. Now I want to buy a new home too. This is where it has all fallen apart. I am told I cannot get a home loan becuase I did not reaffirm my other. I make good money ($119k) and credit scores are back at or close to 700. It seems like I am sunk. Thoughts? Thanks!
Robert Weed
Paul:
I’m updating my answer to you. Two years after the bankruptcy discharge takes care of the bankruptcy end–and if you got your credit scores back up so you have good credit then that is taken care of.
But you have a three year lockout after the foreclosure, which is not a credit issue: it’s just punishment. They want to force you to rent for three years, before you can buy again. I’m told you can fix that by renting out the place you had–and that’s what you have done. But I’m told you now need proof that its been rented or two years–that you are making a long term commitment to being a landlord.
That’s my best understanding today. Don’t think reaffirming or not has anything to do with it.
Jim
My wife and I have been divorced for 5 years. She got the house in the divorce but doesn’t have to take my name off until May when our daughter graduates. She files bankruptcy on her credit cards 2 years ago. I know if she walks away she will be protected and not have to pay any on the mortgage. My question is am I gonna be responsible since both our names are still on mortgage and she was the only one that filed bankruptcy? Let me just add that she is 4-5 months behind on the house payments and has had the house up for sale for 9 months and hasn’t had anyone look at it. So that is why she is considering allowing it to go into foreclosure and just walk away. Thanks!
Robert Weed
Jim: Yes, you are gonna be responsible to the mortgage company if she walks away.
Now your divorce apparently required her to keep paying and then get your name off. The bankruptcy (Chapter 7) does NOT get her out of that. (At least if the divorce was written right.) So if she walks away, the mortgage company can go after YOU–and you can still go after HER. That doesn’t protect you from the mortgage company–but you can make her life miserable, if you want.
Your alternative may be to file BK yourself. I’m a bankruptcy lawyer, so I think you should look into that solution. As to going after her–let me just say that’s why I’m glad I don’t do divorces.
Jim
Thanks for the info….Can I file BK on the house only? I have no other bills or credit cards to file on. I do have a truck payment with only two payments left so the only thing I have would be the house.
The way our divorce is written up is that she got to keep the house as long as she refinanced it or sold it by the time our daughter graduates, which is May 2012. She doesn’t have the credit to refinance it but she has it on the market to sell, so according to my attorney she has done what she is suppose to do??? So I probably have nothing to go after her for do I??
Amy Allen
Hi Mr. Weed-Great site. I appreciate so much how fast you get back to everyone! I have searched and searched and haven’t found anyone (at least from my understanding) that has the same situation as myself. We declared bankruptcy in October of ’09. We thought we had reaffirmed our house. That seemed confirmed to us when our mortgage company called and offered a modification loan. We took it, grateful to have our payments lowered. When we went to buy a car last summer, our credit report showed that our home was discharged and that we had received NO credit for paying our mortgage on time for the past 2 years. My question is, are we now liable for that modification loan? When we called to ask about our credit, the bank said we would have to reopen our bankruptcy because we were in fact not reaffirmed. So what is the modification about? How could they offer that to us if we have discharged (unknowingly) our home and then still not give us credit for it if it is new debt? We bought our house for 404k and it is now worth about 320k. I’m so confused. If we walk away will they come after us for that modification? I don’t want to walk away but we are getting to where we may have no choice. Thank you so much in advance for your response!
Robert Weed
Amy:
What is the modification about? That’s a tricky question. (And fun maybe for lawyers.) This much is certain. YOU are not bound by the modification. You are not liable for the modification loan. You can walk away and not owe them anything.
(So, are they bound by the modification? That’s the fun question for lawyers. Could the mortgage company go back to the old deal at any time? I’ve never heard of them trying it, so maybe it doesn’t matter.)
They offered you the modification because they would rather get the lower payment than get the house. Also, for many loans, they are REQUIRED to CONSIDER a modification when you file bankruptcy.
Whether or not it makes sense, you are in a pretty good place right now. You can keep making the mod payment for as long as that is a good deal for you. You can stop paying and live for free until they kick you out, if you like that choice. And you owe them nothing when you move out.
Jen
Paul: My husband and I filed bk in 2006. We live in MN. We owned four investment properties and also our primary residence. We moved into one of our investment properties to rebuild our life and recently purchased a new home that we plan to be in until the kids ship us off into a senior home. While qualifying for our current mortgage we had to jump through many hoops to prove that we still had a mortgage on our current home. We had to contact the mortgage company because they no longer report our payments to the credit agencies and they stated they never rec’d some documentation for the loan out of the bk, but we obviously continued to make the payments on time. I am now wondering if they never reaffirmed the debt. We have a first and second on that particular home. It is upside down $100,000. I have had a very hard time emotionally and spiritually recovering from our business failure, and still find myself in a panic thinking about it. In any case, are we responsible to continue paying on that mortgage? I have checked our credit report monthly since our filing, and have a different msg on each agency. Two state, “included in bk/discharge” and the next states, “paid or paying as agreed”. The second mortgage company lists, “closed” on all three agencies. I am now wondering, what if anything, would happen if we let that house go? Please advise and thank you!
Robert Weed
Jen:
(First, you need to check back with your lawyer and make sure you did NOT REAFFIRM those mortgages. The lawyer can look it up in the court docket in about 90 seconds to be sure. There’s almost no reason ever why mortgages should be reaffirmed, but plenty of people have posted here on the blog that they did. Your credit report is not a place to look for accurate info on whether the mortgage was reaffirmed. You need to look at the court docket.)
Assuming there’s no reaffirmation, I’m REALLY HAPPY about what you are telling me here. Why is that? At the front of the crisis. I told a lot of people they should be able to file BK, keep paying on their (upside down)mortgage for three or four years–and then get approved on a new mortgage, move out, and dump the old place.
Later, reading the regulations, it looked like Fannie and Freddie were trying to block that strategy.
But now, in the last couple weeks, I’m hearing from my clients and seeing here on the blog, that people are trying to get approved to do exactly that. They are jumping through those hoops you told us about.
Now that you have purchased a new home–and closed on it–right (?) and moved in–now you can dump the place you had been living. (Again, AFTER you have your lawyer check the court docket to be sure you didn’t reaffirm.)
Jim
Thanks for your info…greatly appreciated. Have one other question, my ex is now thinking of doing a mod. In order for her to do that I have to sign a quit claim deed-they say if I do this I will be removed from the debt and deed. Is this a good idea? I’m just scared to do so and the mod not go thru for some reason, then Ill still be stuck on debt and not have a house to fall back on to sell if I need to.
Jen
Mr. Weed,
Thank you so much for your insight. I did contact our attorney and we did NOT reaffirm the first mortgage but we did reaffirm the second. Needless to say, if anything were to happen, we are not on the hook for the first mortgage. This is honestly the best news I have received in a long time. I am hopeful we will be able to sell the property within the next few years to my sister who is currently living in the home. I also found out via our attorney that if the first mortgage company accelerated the loan because it is not owner occupied, they are still not able to come after us.
I have lost a lot of sleep over this and cannot believe that it took your blog and me calling our attorney to clear up my misconceptions.
Also, to confirm your comments above. We did purchase a new home last Fall. We do currently live there and love our new home.
We went through major financial devastation with our investment properties, but as saying goes, time heals pain. Our bk had to season 2 years and the last foreclosure had to season 3 years from the sheriff sale date.
We feel very blessed and fortunate to have made it through to the other side.
Thank you so much for having this blog. You have made a huge difference in my life in a short amount of time – less than 24 hours to be exact.
Thank you!
Kevin
Hi Mr. Weed, your blog is full of such useful information. You represented us in our BK in May 2008 and it was discharged in Aug/Sept 2008 We are so upside down on our house by about $120k on the first and $50k on the 2nd. We have not been able to make a mortgage payment on the 1st in almost 2 years and have not made a payment on the 2nd in almost 3. The bank threatened forclosure last April and then canceled the sale. Our financial situation has changed considerable in the last 8 months for the good! We applied for a modification but got denied because we now make too much money. We were willing to start paying if they put the last 2 years of back payments on the end of the loan or did a forbearance of sort. We are shocked that they denied us and would rather auction the home and lose even more money as the home needs about 20k in renovations to sell it. So now we are waiting for the forclosure notice. How fast can they foreclose on us and kick us out of the house? If the house is sold at auction is it possible that the new owners will allow us to rent the home? Once they forclose are we responsible to pay anything to either lender including taxes? Is the only option for the lender to forclose? Can they force us to short sale? Thanks so much for your advice
Robert Weed
Kevin:
Yep. the banks’ decisions on when to allow a mod don’t make a lot of sense. They do not put the brightest people in the bank into those jobs. (Also, who knows who actually owns the mortgage. That “investor” will have certain instructions that make sense most of the time but may not make much sense in certain cases. so there’s just no telling.)
In Virginia, they only need to give you about three weeks notice of a foreclosure sale; and then they can evict you in about five weeks after that. So you need to be ready to move. But don’t jump too fast. Often, they will give you “cash for keys” if you agree to move out quickly–if you move too quickly, they won’t make that offer. (Of course sometimes they don’t.)
The new owner might be willing to rent to you. Again, no telling who the new owner might be.
The only question I can answer for sure is the last one. The only option for the mortgage company is to foreclose–they cannot force a shortsale.
Angie
We bk discharge in 2009. No reaffirm of mortgage we have reestablished and purchased another home. We have continued to make payments on bk home. We no longer can and want (need) to walk away. ? How can they ding our credit now? The past 3 years no reporting done now that we are approaching 90 days they are reporting last pay and foreclosure starting? Is this right? Also they are calling demanding payment. Our credit is 636 no late pays solid pay on new mortgage! The only late is the bk house. Can we fight it?
Robert Weed
Angie:
“How can they ding our credit now?” Not legally, they should report bankruptcy 2009 and nothing since then. That’s apparently what they did when you were paying, they still should be doing that.
Since they are also calling for payment, you have a clear violation of the bankruptcy discharge. (While most bankruptcy judges do NOT see credit reporting buy itself as an attempt to collect the debt, you have a much stronger case that calling for payment obviously is, and the credit reporting is part of that.) You have rights under Fair Credit Reporting only after there’s been a dispute (with some exceptions). But the bankruptcy violation allows you to sue right away.
(Is this the SAME mortgage company, or did somebody new take it over. Somebody new might also be a debt collector, which would give you rights to sue under Fair Debt Collection. You don’t need a dispute to sue under the FDCPA.)
You should see if your bankruptcy lawyer is up for a fight. If it’s a “new” mortgage company that’s taken over the debt, you might also look for an FDCPA lawyer at NACA.net.
denise
Some misinformation here about being able to get a mortgage (FHA ) after Chapter 7 bankruptcy with mortgages included. The seasoning date follows the discharge date in this case, not auction date when the bank takes back the house. If the bank still hasn’t foreclosed on you after the discharge, and it has been 3 years since discharge date, you have then satisfied the seasoning period. It doesn’t matter whether or not the house is still in your name, your liability for this house is now over. This will not prevent you from getting an FHA mortgage. A bankruptcy with mortgages included is considered a deed in lieu of foreclosure, thus the date of discharge is the date you need to be concerned about, and it is considered that you had a bankruptcy and foreclosure at the same time. Now some lenders, especially these days, can add their own overlay to this, and other conditions if they choose, so shop around. But there are plenty of borrowers who bought a home with mortgages discharged in a bankruptcy.
Here’s the rub….you have to show 12 months of proven rental or mortgage payments..so you can’t just stay there free and then go immediately to getting an FHA loan, although I am hearing that you might be able to get around the proof of rental payments or mortgage payments IF everything is in top top shape…income, at least 3 new trade lines since BK, decent FICO, etc…But I am now stuck on the VOM issue…
But the seasoning date if you included mortgages in the bk is the seasoning date is discharge date not when the bank gets around to selling the home and getting you off the deed…which at least makes my life easier..because the banks are taking forever to sell these homes…and I am hearing then it’s 2 years from bk with mortgages include, of course the banks can overlay their own rules on top of FHA regs…shop around I guess.
PS I am in the process. What I found out that was enlightening was the seasoning DATE….If mortgages are included in the Bankruptcy and discharged..that’s it..it’s a BK and the date of seasoning starts at the discharge date…FHA rules then are 2 years from discharge…you don’t have to worry then about the auction date of the home…you’re done with it..the bank then needs only to do a quite claim deed to get you off the deed…also there is no foreclosure process…The key is to find a lender/mortgage broker who knows FHA ….I finally found someone who does…
My stumbling block now is that i don’t have proof of 12 months rental payments because I have been sitting in the discharge home..not having the right info.I figured I couldn’t buy for a while so I would sit in this until I got a NOD then get a rental house and go from there…so I was able to save and pay off my student loan, good news is I am now debt free, bad news is I may not get approved because I don’t have proof of rent payments
But I am told that if I have other things like an auto loan or other installment debt…I paid off a used car loan and my student loan, plus several other credit lines ( I have 3 credit cards with very low balances) then I may be able to squeak by
I also have currently a 660 mid fico, and a good job for years, good DITI, less than 29% on front end and on backend….and that should work …FHA is requiring no less than 580 but banks are requiring at least 620 and some 640
So you have to deal with the lenders overlay requirements…
So that’s my complicated answer, I have been given a name of someone who knows FHA inside and out…not just going by the 4155..which many just quote from that…so I need to 1) find out if it’s possible, and 2) if not will rent for a year than try again…
But things look better with this new info.I am surprised at all the bad info out there.
Check out bankruptcy forum under the poster, Marcer, for some good info..he’s a lender for 17 years….
Robert Weed
DENISE:
At the front of the crisis I hoped people could do just that. Keep paying the current house and stay there until they got back to good credit; then get approved, but a new place, move out, and let the old house go.
As I got into it, though, I read the regulations to say you couldn’t do that.
Now I’m hearing form several people who’ve been close to approval before something has gone wrong.
Now YOU are saying those loans should get approved.
I’d like to hear from someone who actually got a loan approved in that circumstance–either for themsleves or for a client.
You are one more person who’s been TOLD you can get approved, but haven’t yet.
Jennifer
Hello Mr. Weed My husband and i were trying to refinance with the Freddie Harp program since we filed bankruptcy in 05. The loan officer said my husband did not reafirm the mortgage but I did. We would love to buy another house is he still held responsible for the loan. His name is still on the documents we get. If they pull his credit can they see that he has a lien which would be the mortgage still. I can not get the loan since I am on Workmans Comp so i do not have a income. Thankyou!!!
Robert Weed
Jennifer:
My hope that the beginning of the crisis was that people could do what you are trying to do–stay in the current house–paying at least the first–until they were back to good credit and could buy again. And then move on and let the first house go.
Later, as I studied the regs, I decided those loans could not get approved. That’s my understanding now. I think you can’t get approved for a new mortgage if you are still in the house that was included in the bankruptcy.
In the last month I’ve heard from several people–here on my blog and also my own clients in Virginia–who have almost gotten approved and then something has come up at the last minute and blocked them.
But right next to you is a comment from DENISE, who says I’m wrong and those loans should be approved. My reply to her asked her for more info. I hope she can tell us something.
Josie
My husband and I filed for BK and it was discharged in 3/2010. My husband was on the title of the home we reside in (Minnesota) and his brother owed the note (loan). My brothern’law modified (HAMP) the first mortgage but was denied (2MP) due to Bank of America not receiving the Dodd/frank form. We have been current with our first loan since the modification- but have not made any payments, except for the 4 trial payments, for the 2nd loan. Both loans aare with the same servicer. BA has threatened us with foreclosure due to default on our second mortgage. We owe lots of money to bring it current- and are not in a position to pay it. We decided to not pay this month’s 1st mortgage due to a pending foreclosure. My question is: since me and my husband are not on the loan note- we are not responsible for this mortgage; however, my brothern’law is. Can he file BK and clear the finanical responsibility regarding the home. I am assumming so. I am just hoping this does not impact us. Do you know how long it take in MN for the foreclosure process. Thank you.
Robert Weed
Josie:
Sounds to me like your brother-in-law should file bankruptcy, to get out from underneath that house. Of course his lawyer will want to know the complete details of his situation, to be sure there isn’t some reason why he shouldn’t.
The brother in law filing will not impact you and your husband.
How long does it take to foreclose in MN? I have no idea at all. Sorry. (I’m a lawyer in Virginia–that’s all I know.)
Is there really equity if they foreclose on the second mortgage? You haven’t given me any info about the value of the house. If not, there threat to foreclose out of the second may be just a bluff.
steve
Hi,
Thanks for the fantastic info. Claimed bk 7 last year and did not reaffirm either first or second. Also stopped paying both as b of a has no real interest in working with me and I don’t want the house any longer anyway. Now only have student loan debt and both my wife and I are back to work. Since the mortgage payments don’t show up on my credit anymore would it be possible to get an fha mortgage in the near future even though we are still living in the current home which will be foreclosed upon at some time in the future. Thanks Steve
Robert Weed
I THINK you won’t be able to get a mortgage until three years after the actual foreclosure, which is still some time in the future. I keep hearing from people who think they are able to get around that–most of them get real close and then something comes up.
Ardella Carroll
I went bankrupt in 2009. I still make monthly payments on a mortgage that is not reaffirmed. Why do they still include over 260.00 per month PMI? Can I refuse to pay the PMI and keep my home?
Robert Weed
Well, maybe. If you don’t make the full PMI you are not making the full house payment. Would they be able to foreclose you? Yes. Will they? Hard to say.
Stephanie
My husband filed for chapter 7 in June 2009 and was discharged in Oct. 09. Somehow our condo we reside in was not reaffirmed, which we have continued to pay. He wanted it reaffirmed but the attorney forgot to file the proper paperwork. His thoughts were that if it showed perfect payments on his credit report, it would be easier to recover from the bk. But, the bank said too bad too sad were not reporting it.
It’s now April 2012. He purchased another home and was able to get financing through his credit union but no major company would finance him. They looked at his tax returns, security statements and that was it. The deal worked out.
Now back to the condo, and this is going to sound crappy, but we were thinking about letting it go into foreclosure. These condos are not selling and the property values have declined.The bank was unwilling to discuss reaffirming after the paperwork error. What
are the repercussions of letting the note default? The HOA fees were not put in BK. What happens if we don’t pay any of it note, taxes, HOA fees, fire dues? Also, on the county tax website it shows a zero balance on mortgage amount. It was never like that before the BK. Thanks in advance for reading my questions.
Robert Weed
Steph: Aren’t you GLAD that you “somehow” didn’t reaffirm the condo? If you had reaffirmed it, you’d still be stuck with a condo that is “not selling” and where the “property values have declined.” Good luck saved you from poor thinking on that.
So, what to do with the condo since you have a new mortgage and are ready to move to your NEW house.
The mortgage company on the condo will eventually foreclose you, if you stop paying. However, because you did not reaffirm, they cannot come after you for any money.
How long will they take to foreclose–hard to guess, but could be six month or even up to a year. (Then tend to be slower where condo fees are high.) In the meantime I recommend you rent it for enough to cover the HOA and fire dues–because you will still be on the hook for those until the mortgage company does foreclose.
What about taxes? You still owe the taxes for now. The buyer will have to pay them when the place eventually forecloses. In the meantime, will the county come after you? I don’t know the answer to that. I’m starting to see that a little here in the Virginia suburbs of Washington DC. I have no way to guess what the counties are doing where you are.
Good luck.
So, you should probably get enough to cover the taxes, too, when you rent the place.
Joe
My parents filed for bankruptcy in june 2011 and were discharged in september 2011. They remained current with the car payment but they have been receiving a letter that says they don’t have to make anymore payments, however the car may be taken away. Also, they receive no information as to how much is left to pay for the car, they just continue to make the same payment. What exactly is going on? Should they continue to make payments? And if they don’t, will the car be taken away? Thanks in advance- Joe
Robert Weed
Joe:
Should they continue to make payments? Yes.
If they don’t, will the car be taken away? Yes.
What is going on? The bankruptcy means that the creditor cannot take any steps to collect the debt–like sending bills or calling and asking where the payment is. But the right of the company to repossess the car is still there. So, if your parents don’t pay, they won’t get late notices or calls. They will wake up, look out the window, and see the car is gone.
Karen Wymer
I have a car and a credit card with my bank. I dont wish to get behind with them or loose my bank. I can not afford the home I am in anymore. I lost full time employment 3 years ago and just since August can no longer meed the payments on my home. I have tried every thing to get the mortgage company to work with me. It is just not going to happen. I know trying to lease anything with this house on me will be impossible. You say there is no way just to do a BK on the home and nothing else. I can afford to continue the payments on the car and credit card. Is there any other alternative on this house thing? I need to do something so I can start to clear things up and try to reistablish credit again.
Robert Weed
Karen:
Trying to get clear on your question. Is this it: Can I file bankruptcy and dump my house and keep paying so I can keep my car? Under nearly every case, the answer to that is yes.
Are you saying you want to keep paying on your car–and also keep paying on your credit card? Because you LOVE the bank that gave you the credit card. Karen, the universe is full of banks. So that seems like a really dumb idea to me. But if its a small local bank where you could actually talk to someone, or a credit union, then probably that could be worked out. If it’s Bank of America or somebody, then I don’t see how.
Karen, the reason a good lawyer will take a lot of time with you, is to find out what you are trying to accomplish, and if it makes sense, to try to work it out.
ASHLEY
When you file Bankruptcy and Include your mortgage why do you have to wait 3 years after the bankruptcy is discharged before you can get a home loan??
Robert Weed
Ashley:
Good question. the only answer I can give is you can’t get approved sooner.
Seth
In 2010, under the advise of my attorney, I filed bankruptcy (Chapter 7.) At that time, my credit score was close to 800, my credit cards had no limits, I can honestly tell you that from the age of 16 to 29, EVERY payment was on time. So, why did she recommend this? Well, my former partner and I got divorced (legally on both ends- me live in New England. During our marriage, we internationally adopted from Guatemala in 2004 and 2005. We where great together! Then, the orphanage contacted us with another baby (we where not even seeking another at that time,) a biological sibling to one of my children. I took one look at him, and I knew I could not say no… My partner did however, say NO! This dispute was the cause of our divorce. I no longer saw him as a human, he seemed heartless, and I fell out of love immediately (in my opinion, one person who finds another person, and they connect- like we did- I know it sounds nuts when I saw how I looked at him and felt inside, but thats the truth.) I chose my baby over my partner, I could NOT look at my daughter without feeling sick that if I did not do everything I could to adopt him, I loved her… I asked my ex what would he do if I was female, and became pregnant, he said “you’d have an abortion or I’d kill myself. That was the end. So, I was awarded the house, full custody (him with visitation supervised by his mother at first: he was ordered to take a parenting class, a racial diversity class, anger management.) I swear I didn’t know him anymore? He was ordered to pay child support ($736.16 per week) which I reduced to $125 a week. I was stupid, but I didn’t want to ruin him financially (I wish I could change that order now!)
For two years, I worked full time (I was a stay at home dad before), then I was laid off, collected unemployment for about one year… and have not been able to retain employment, being a single father with no help (like a partner, or a sibling) is extremely hard, I praise woman (and men) who are able to do this, its hell. The only job I could get was selling on Amazon, Ebay, Albris, Craigslist, I’m embarrassed to say I get food stamps- and they are calculated by my income, child support- pennies- and I bought a book called “123 everything you need to know when you own a home”- which I used to guide me in transitioning my basement into an in-law apartment, THANK GOD for these resources, have been heaven sent. While my ex remarried 23 days post our divorce, bought a new house, a BMW, it made me sick.
I fought from Aug 2007 to June 2012. I had an attorney until 2010, but I wasn’t able to pay anymore, so I took a gamble and rep. myself. I filed bankruptcy for relief from the legal bills and the credit card debt. Anyway, I was granted the judgement, and I had a weight lifted that kept me up at night, and gave me shortness of breath daily. I reaffirmed my mortgage and my car… and resumed my payments as scheduled. However, I soon learned that I could not keep up, I did not make enough. I applied for refinance 3 times, then the Modification (6 times denied) but the 7th granted (four month trial period.) Before I started, the mortgage rep let something slip as she explained, she told me that I was discharged from this debt and it was never reaffirmed (neither was my car.) I had sold my car and paid the loan off, and, I sold my lives possessions to keep up with the payments on the house, the modification would have taken me from 2389 per month, down to 1209 a month. I felt blessed to finally be given a trial. But, with one slip of the tongue, I learned that all of the struggles where for nothing. I contacted my attorney- and found she had been disbarred! In payments to the mortgage, $68,000 and auto was about $22,000. My credit report was clear, nothing reported, and all discharged. So, right now I am living in the house for another month and moving.
My question is, do I have any case to regain the money I paid- even a percentage? From either bank? GMAC and Citi-mortgage and Bank of America for the car?
What happened to that money, it shows up nowhere? I lost my life savings, majority of the possessions to this. Any advice would help. Can I get money back? Or, get something? Can I sue?
Robert Weed
Seth: Wow!
That’s why I’m glad I don’t do divorce law.
Sadly, your case is also an example of what I call the car wash approach to bankruptcy. The car wash doesn’t care where the car has been or where you are going–or what happens when you turn the corner.
I like to say that a good bankruptcy lawyer is like a tow truck–and if you have spun out and go off the highway of life–before I tow you back on we need to talk about what highway you were on and where you are trying to go. That didn’t happen in your case and some years and some money were wasted because of that.
There’s no way I see of getting any of that back. But why are you moving next month. I’m not sure why you have given up on the loan mod–and even if you have, why are you moving. It doesn’t sound like you have been foreclosed yet. You need to live for free for as long as you can.
victoria
My husband and i filed bankruptcy in 2007 discharge may 2007. we did not reaffirm with mortgage. BOA transferred our loan to Green Tree who is not reporting to credit bureau our payments. We are trying to refinace using HARP 2.0 and mortgage broker is telling us we cant because of house being included in bankruptcy. Green Tree refusing to post proper credit for payments made unless we reaffirm? Why do I have to reaffirm with Green Tree when they are not original servicers of the note during bankruptcy?
Robert Weed
Victoria:
Two things. Not only do you not have to reaffirm with Greentree, you can’t. Once the bankruptcy is over, there is nothing you can do to reaffirm.
Mortgage broker??? I don’t think you need a mortgage broker to do a HARP. If you need to prove that you are paying, you can do a RESPA qualified written request and ask them for a payment history–they are required to give you one. That provides your proof that you are current. Not sure who is helping you with HARP, but they don’t seem to have a lot of imagination. The mortgage servicer has forever and a day to reply to a RESPA request, but they have to reply eventually. http://www.weltman.com/publications/all-articles-rss-feed/?i=426.
(The time to reply to a RESPA request was shortened from 60 working days–ie twelve weeks–down to 30 working days–six weeks, by the Dodd Frank law. That will eventually take effect no later than January 2014. The banksters, and the US Senators they own, whine and moan about Dodd Frank being such a burden on the banks. BURDEN? They need more than SIX WEEKS to tell you the status of your account???? What a load!!)
Anita
Hi,
I filed bankruptcy (state of Illinois) in 2010. The mortgage that I owed on my 2-flat building was of course included in the bankruptcy. The mortgage was SOLELY in my name only. I didn’t sign a re-affirmation of that debt. My ex-husband decided that he would continue making payments on the building and did so up until about a year ago. The mortgage company started foreclosure proceedings but in January, my ex-husband did a loan modification with the mortgage company- without my consent or me signing any papers. I just checked my credit report and Experian reports “Loan Modified” under the creditor statement section. The mortgage company didn’t even contact me. Is this fraud? Do I need to contact a lawyer? Will the mortgage go back on my credit as me owing a balance? Will this affect my credit should my ex-husband decides to once again stop making payments?
Robert Weed
Anita:
You have two issues. One with your ex. One with the mortgage company and the credit bureaus.
Let’s take the easy one first. The mortgage should show on your credit report as discharged in bankruptcy 2010. It should not show anything after that. It should not show paying; it should not show not paying. A loan mod doesn’t change that. If your payment history starts to show, you should do a Fair Credit Reporting dispute. If that doesn’t fix it, you need to find a Fair Credit Reporting lawyer in your area.
The hard one is with the ex. It sure smells like your ex must have signed your name to the loan mod papers. All I can say is, that’s why I’m glad I don’t do divorce law.
steven
My BK was discharged on 10 of 2010, I am still in my home and I have been current with all my payments now and before my BK. I filed my Bk on my own and not jointly with my wife. I am a vet and thinking of useing my GI Bill to purchas a house next year. the rules I have recived from the VA states that I can be approved for a lone two years after BK. The house I am in has lost about $50k in value, and it will never sale. although my wife didn’t file, the payment are not showing up on her credit report ether. so the question I have is when i do get approved for a VA lone, and if i let the house i am in go back will it show up on my credit? also sence payments are not showing up on my wifes credit now, would a forclosure show up on hers afterwords?
Robert Weed
Steven:
I THINK that’s its very important that you stay current on the existing house up through the time you close on the new house you want to buy with your VA eligibility. Just from other people’s comments here on my website, when they stop paying after the loan is approved, then something always seems to go wrong before settlement.
Once you have safely moved into the new place, and then you stop paying, the late payments and foreclosure should NOT show on your credit. However since your wife has NOT filed bankruptcy, the payments should be showing on her right now. Since they are not, that gives you and idea of the gap between what is supposed to happen on your credit and what actually does.
At some point, probably, the existing mortgage company will figure out your wife was NOT in the bankruptcy. At that point, it will probably start hitting her credit, and also they might come after her for the money.
So she may need to file a bankruptcy at some point, or have bad credit for a really long time.
Derrick
i filed bankruptcy last year i had a car payment but after my bankruptcy was discharged i was told to stop making payments. The company said i made the bankruptcy up and all kind of stuff. one day i woke the truck was gone im wondering why my truck was repo. i had no balance left on it and it even said it on my credit report. im confused and i filed in virginia
Robert Weed
Derrick:
Huh?? “I was told to stop making payments.” If you stop making payments, they are going to repo your truck.
Look at what I say here. https://robertweed.com/blog/after-bankruptcy/after-my-bankruptcy-hearing-pay-the-car-pay-the-hoa/.
Kim
I filed chapter 7 bankrupcty in 2010 and did not reaffirm my mortgage. After my discharge the mortgage company said I qualified for a modification loan. I was really going to abandon it and move on, (it has issues). The payments they introduced to me were cheaper than rent, so I signed the modification paperwork just to have a cheap roof over my head, since I was in financial ruins. Now it is 2012 and I am financially rebounding and would like to leave my home for something nicer. My mortgage payments are still not showing up on any of the credit bureaus and it still states that this mortgage was included in the bankruptcy. Can the mortgage company do anything if I choose to leave my home? I still owe more than it is worth, so selling is not an option or would I legally even have that option? Is this house my problem or the mortgage company? Indiana is the state I live in if that matters????
Robert Weed
Kim:
You are a good example!
Waiting after bankruptcy to see if they would give you a loan mod was smart. You have been living cheap, and now that you have rebounded financially, you have more options.
If you stop paying, they will eventually foreclose and kick you out. How long would that take? Maybe five our six months–could be a year or longer. I don’t know the procedure in Indiana and on top of that, it’s unpredictable. So you can stop paying, plan to leave when you have to–and rent.
Now are you hoping to buy again? Then my advice is not so clear. I THINK you need to stay current where you are until the loan and the sale closes on the new place. And I am NOT sure that even that means you can go straight from one to the other without having to rent for three years in between. If you are trying to buy in the near future you need to talk to some lenders where you are BEFORE you make any decision to stop paying. (As I read the regulations, they want to force you to rent for three years, before you can buy again–but there may be ways around that, I’m not sure.)
Damon Bradley
Question. I filed bankruptcy in 2009 but wanted to reaffirm my mortgage. On my paperwork the box was checked next to the mortgage that it was to be reaffirm but according to my mortgage company my attorney never did it. I have been paying my mortgage on time since then and only a few months ago did I become aware of this by my credit report, showing both mortgages as included in bankruptcy. I have talked with both mortgages and they both have stated that it was included. Now If I walk away from my house will it show up twice on my credit report as a bankruptcy and a foreclosure?????
Robert Weed
Damon:
You don’t tell me enough to be much help back.
First, WHY in the WORLD did you want to “reaffirm your mortgage.” You tell me the box was checked, but what were you thinking? (Reaffirming a mortgage is rarely a good idea, but it is sometime. Did you just flip a coin, or did you really go over it and have a good reason?)
So that leaves me asking what changed your mind now? Did that good reason go away? Or was there never a reason? Why do you now want to walk away? Just because you are mad about your credit report? Or has something changed.
If you can’t afford the place–if that’s why you are thinking of walking away–have you considered just not paying the second mortgage? That takes “nerves of steel” but I try to explain that here. https://robertweed.com/blog/chapter-7-bankruptcy/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/ You can think carefully about whether that’s a strategy that MIGHT work for you.
Now, to answer your question. Your credit report should show the bankruptcy and nothing later. So walking away should NOT cause a foreclosure to show up. But credit bureaus and banks, like people, do not always do what they should. So you need to check it, you need to be ready to dispute it, and you need to see a lawyer if it’s not right.
But you need to understand there still will be a foreclosure–and that WILL affect how soon you can buy a home again, if that’s what you are trying to do.
My law office turns away a couple people a week who just want to come to see me to ask “one simple question.” They want to find out something from me, without tell me anything about what they are trying to do. Very few people hit the target with a shot in the dark. I don’t.
Debbie
I filed for Chapter 7 October of 2010. I was able to keep my car and two homes. After a year of unemployment, I got a job out of state. The car and one mortgage are current and paid every month on time. My brother lives in the property that is current. The other mortgage is not current because my tenant is not paying the rent. It is now 3 months behind. In addition, it is worth 1/2 of the mortgage balance. I no longer want this property. What is the best way to get rid of it? Should I file chapter 13, get a deed in lieu of foreclosure, or ????
Robert Weed
Debbie:
If you did NOT reaffirm the mortgage on the house you want to get rid of, then the bankruptcy still protects you if you stop paying. You need to ASK YOUR LAWYER if you reaffirmed–I almost NEVER allow my clients to reaffirm a mortgage, but most people who ask questions on my blog act like it never got discussed.
So once you confirm that you did NOT REAFFIRM, then what’s your question about “best way?” Best way to get it out of your hands quickly? Certainly not with a Chapter 13. Whether banks want a foreclosure or deed in lieu varies from state to state, so I don’t have a guess. Best way for your credit in the long run–that would be a shortsale, although that small benefit on your credit is not often worth the trouble. I have no idea how much trouble shortsales are with whoever your bank is and the real estate market where you are.
Now if you did reaffirm, then you do need to talk to a lawyer in your area about a Chapter 13. A chapter 13 would get rid of the money you owe on the house if you let it go–but only if it’s filed at least 4 years after you filed the Chapter 7–that would be 2014 some time, based on what you told me.
Tammy D
Hi , I’ve been reading your comments and find it helpful , BUT …i am still unclear about my issue. My husband and his ex-grilfriend split a few years ago , she left the house that she was a co-borrower on and he stayed a kept paying the mortgage never late , because he wants to keep the house . Six months after she left he had her sign a quit claim deed to get her off the house title , she did . BUT , a week later he received notice from Bankruptcy court stating she has filed bankruptcy and the first and second mortgage has been included in it . My husband called the mortgage companies and asked how this will affect him , he was told it should not and if she puts the house in BK than if he ever sold it she will not be entitled to any money. Now my husband couldn’t refinance the house into his name alone due to the market value on home dropping like 50 % , which he was upside down . But what did happen was re was able to get a loan modification based on his income alone. Which actually made the home payment on First mortgage very low :). BUt her name is still on the mortgages. Now yesterday we went to buy a car ( finance one ) , and was told my husband’s filed BK…and both mortgages shows in Chapter 7 BK…and on the credit report it doesn’t show any home payments we’ve mad ( on time ) . It shows accounts CLOSED discharged in Chap 7 BK . It won’t come off until 2018 . What do we do about this ..it looks as if HE filed BK. WE are so confused and angry..she walked away not him …every month we pay …. his credit is bad now …we can’t finance anything ! Please give some insight
Robert Weed
Tammy:
About fifteen years ago a Judge slammed each of the three credit bureau I think $5 million because they ALWAYS let one person’s bankruptcy leak over onto the credit report of the co-signer who was still paying. Exactly what has happened to your husband. The credit bureaus set up a whole new system, called Metro 2, to keep that from happening again.
And that worked, mostly. At least the the problem went from always to hardly ever. Hardly ever, though, is not the same as never; and that has clearly happened to your husband.
So he needs to get his credit reports. Annualcreditreport.com is a good place. Freecreditreport.com is NOT. And then check around for a lawyer in your area who does FCRA law. naca.net is one place to look.
Vicki
My husband and I made a bad decision and went into partnership with another guy. He was younger and had nothing to invest in the partnership; My husband felt strongly about the company they were starting up so we used our own personal collateral to start the company. After a year the partner got greedy didn’t feel like company was making enough money fast enough and because of his 51% ownership required for the government properties, he pulled out and we lost all the contracts we had acquired. This left my husband and I scrambling to save all our assets we used as collateral and had to file Chapter 13 for help. Fast forward a year from when he walked out of the business and left us high and dry…we filed bankruptcy and having NEVER been late on a mortgage payment; nor being late on property taxes that we personally pay each year that is not included in our mortgage payment nor the insurance; ever since we filed bankruptcy, Aurora Loan has raised our payments from $950 to $1600. They went in without notification and made property taxes without any communication or they were due and put on our home loan; then they put another $1700 a year of insurance on the house even though we had and have always had a current policy on our home. They are showing because of this an escrow shortage; they also charged several hundred dollars for attorney fees; Our home loan was never behind or in jeopardy. Each time we call they tell us they can’t talk to us because we are in bankruptcy. I send letter after letter and they don’t answer yet keep adding on these outrageous charges. What can we do to get help? How can the mortgage company take advantage of us like this? Going from $950 to $1600 a month after you filed bankruptcy just seems criminal to me. Each time we tell our bankruptcy attorney what is going on she doesn’t seem interested because it was never in jeoparday and is mainly focusing on our “debt” to be paid. Any suggestions?
Robert Weed
Vicki:
Sounds like you weren’t a lot more careful picking your lawyer than you were picking your partner.
There is only one small piece I can add. If you write to your mortgage company asking about the status of your loan and “they don’t answer,” then you have a RESPA violation. You might want to check with the National Association of Consumer Advocates for someone in your state who does RESPA law. naca.net.
Sorry, I don’t have any suggestions for your bigger problem.
Michelle
I’m strongly considering filing bankruptcy in CA. I’m self employed and due to financial hardship, down turn in business and not being able to yet recover, I used credit cards to cover biz expenses and accummulated significant credit card debt. Despite getting a loan modification on my BofA home loan, I have not been able to make the payments. As a result, the condo is in the foreclosure process but, there is not yet a sale date through the court. I am scheduled to appear in court in May for a trial due to civil suit filed by one of the creditors. So, as I understand it, the best option now is to file BK, including the house- not reaffirming it-before the trial date so there isn’t a judgement filed, would you agree?
In my situation does it serve me- in terms of repairing my credit sooner & being eligible for another loan sooner- to initiate a deed in lieu simultaneously, or soon after starting the BK process. Since my loan is now with Fannie Mae I was informed that I could be eligible for money for relocations or to lease the condo & be eligible to get another home loan from Fannie Mae in 2yrs and would take 8-10weeks to complete the deed in lieu. This has caused me to think this may be a good option to consider during the middle of the BK process. I need to understand what’s the best option to pursue.
I’m also wondering how BK & qualifying for deed in lieu of will appear on my credit report and impact my credit.
Robert Weed
Michelle:
Should you file bankruptcy before there’s a judgment against you in the civil suit by one of the creditors? You have given me a picture of your situation, but I still can’t begin to answer that question. Your credit will recover sooner if you file a bankruptcy before there’s a judgment. But that’s only one factor to consider. When you go over your complete situation with your lawyer, there may be other reason why you want to move quickly–and other reasons why you want to wait.
For example, you say business has been really slow. How long do you need to live for free?? It may be that holding off the bankruptcy to keep you in the condo longer is more important than the impact of getting a judgment. Another factor is the condo fees. Are you paying them? Can you? The after bankruptcy condo fees are after bankruptcy debts. How and whether you can pay the condo fees is another factor to consider on timing.
With a complete picture, your lawyer might look at other factors to balance in deciding when is the best time for you. It’s not just one thing, usually.
You asked about a deed in lieu. Some states they want deeds in lieu–some states they don’t. It is right that a deed in lieu will help you qualify sooner to buy again. Again, I’d want your complete picture before deciding it was your best choice.
Marianne
Hello. I have a few questions. We filed bankruptcy in 2008. We thought we reaffirmed, but found out when buying our new house we didn’t. The people who were living in our home decided to move out and no more payments have been made. We received notice in Aug. that foreclosure had started, but no sale dates have yet been set. My question is, How do I find out if our mortgage company has the right paperwork to file? Our loan has been sold many times, and I am hearing that illegal foreclosures are taking place because there isn’t the right paperwork by the mortgage company. I was told I have no rights to ask since our home was included in bankruptcy, but that I still “owned the home”. How do I own the home with no rights? Are we responsible for insurance? I was told yes. So again, we own it, but don’t?
Robert Weed
Marianne:
Hey. I have a question for you. You say that “when buying your new house” you found out you hadn’t reaffirmed. Does that mean you were ABLE to buy a new house. There are many people who’ve comments on my blog that they tried to stay in their house after bankruptcy and then buy a new one–and the deal fell apart at the end. If yours got approved, you’re only the second person who has said that. Please reply.
To answer your questions. Don’t know who told you that you have “no rights” because you filed bankruptcy? Your old lawyer? A debt collector? Some smart guy? You are right. You are still the owner. You have all the rights the owner has–and most of the responsibilities, too. The bankruptcy, though, still protects you personally–they cannot come after you for money if you don’t pay. Other than that, you are the owner.
How do you know if the people who are claiming to foreclose actually have that right? Sorry, I have no idea. The foreclosure procedure is set by each state–here in Virginia people have almost no rights to fight it. So I don’t know much about how to fight these things in Virginia–and I know nothing about how to fight it anywhere else. Sorry. You need to talk to a lawyer where you are. I don’t have any suggestions.
(Actually I am fighting one in Virginia, and winning so far. But that’s on a Virginia-specific issue that would not apply many other places.)
Anoyomous
I have filed for bankruptcy and included a car. The creditors never came to the meeting of the creditors or sent any paperwork in regards to the car nor have they regained possession of the car. My question is how can this affect me and what responsibility do I have if any to make sure the creditor regains possession of the car?
Robert Weed
Anoyomous:
Sometimes around here, if the car isn’t worth much, they never bother to come get it. That would be one explanation. The other would be that you moved and didn’t tell them and they don’t know where it is. You didn’t say when you filed, so I don’t know how long this has dragged on.
If they just never bother, then it’s still your car. But they have the title, so you can’t sell or trade it.
Kim
I filed for BK in 2010 and was discharged in June ’10. I had 2 mortgages – 80% and 20% (avoided PMI) and I did not reaffirm either. I have been making my payments on time since so that I could keep the house (cheaper than renting!). My husband and I are planning to move out of state at the end of next year and the home is about 25K underwater. I checked my credit and my score would drop 8 points total from a foreclosure. Should I try to short sell? Deed in lieau? I don’t want to have to worry about taxes/HOA fees after we walk away and I certainly don’t want to worry about a 1099C form the banks…
Robert Weed
Kim:
They cannot–should not anyway–give you a 1099C–because the bankruptcy got rid of the debt. (Not the foreclosure). So there are no tax consequences from how you get rid of the house after the bankruptcy. See this. https://robertweed.com/blog/general-bankruptcy-law/bankruptcy-foreclosure-1099-a-and-1099-c/.
There are some reasons to try to do a deed in lieu or shortsale. Those often get the house out of your name quicker than a foreclosure, and that cuts off having to pay the HOA sooner. Also, you MAY be eligible to get a loan to buy again sooner if you do a shortsale rather than just let it go.
The foreclosure should not legally show on your credit report–it should just show bankruptcy and nothing after that. But there will still be a foreclosure, unless there’s a shortsale or deed in lieu.
Jeremy
Hello Robert:
We hope you are doing well. I read through all the post and could not find this sitiuation. We filed Chapter 7 in November 2007 and were discharged February 2008. We had two homes at the time. Neither home was reaffirmed in the bankruptcy. We stayed in our primary home and continued to make “payments” due to our son’s health and the fact that it would be dangerous to move him. This was acceptable to the bank and with the understanding that as soon as our son was healthy enough, we would vacate the premises. Our son recovered and as per our agreement, we left the home in August 2011 and moved into a rental. Interestingly enough, the payments show positive on our credit report as we were never late (before, during, or after the bankruptcy). The bank informed us about 2 months after we left the property that they changed the locks and winterized the property.
Due to a job promotion, we relocated to another state and decided to purchase a home since it had been 4 years from discharge. All was going well with an FHA loan until the week before the closing which we were told the loan would not be approved (talk about gut wrentchingly embarrasing considering we had to re-open all those wounds from having to file in the first place). It was not due to credit issues, but rather the fact that the primary residence was still titled in our name. The bank claimed they have never seen this before, but there was nothing we could do to get the loan. Right now, it sounds like the only way that the home will be out of our name is if the bank forecloses on the property. Per the bank, FHA will not approve any loans for a Foreclosure after a bankruptcy. At this point it sounds like we are very stuck.
Further, even if we went a more conventional route, we would have to wait until after 3 years from the foreclosure. So, if I am understanding all this correctly, it is going to take between 7 and 8 years before we can purchase another home (4 years from discharge + 3 to 4 years depending on when the bank finally forecloses). Does that sound correct? Are there any other options? Every bank that we have talked to states that they have never seen this before.
Thanks in advance for all your help. Jeremy
Robert Weed
Jeremy:
I think those banks are right, according to the regulations. You can get approved two years after the bankruptcy, but it has to be three years after the title of the house is out of your name. It’s not really a credit issue. It’s punishment that you have to go through for giving up the first house.
I used to think you could avoid that by renting the house you used to be in. BUT they now want to see that you have had it rented for two years. There’s at least one person on this blog who seems to have gotten around that some how. But everyone else says the same thing–the deal falls apart at the end. And that’s the way I read it.
(Now MAYBE MAYBE MAYBE they don’t pick it up if you absolutely stay current on the first house until you close on the second. That might might might slip by. But people do tend to do what you did–stop paying when they’ve been approved. Everybody tells me the loan then falls apart.)
Maya
My husband and I filed a CH 13 in 2009 and will be done with our final payment in Aug. assuming our discharge will be by Dec.
We have rental property in AZ that has continued to lose value and was included at the time of our bankruptcy but we chose to keep. We have never been late on a payment but we no longer wish to keep the property. We are looking into short selling since the tax relief looks like is ending this year. When is a reasonable time to stop making mortgage payments (except for HOA and taxes) to be safe? Never? Since the discharge isn’t done yet or would we risk our case closing if we stopped making mortgage payments? FYI we do have a renter in the property.
Robert Weed
Maya:
You need to be really, really careful about exactly what your Chapter 13 plan said about that property in AZ. You need to look at it very carefully with your lawyer. Depending on how that was written, that debt may not be discharged. Real estate debts are usually NOT discharged in Chapter 13–and the plan needs to be drafted really carefully if you are trying to discharge them. Based on what you said, there is no telling what your lawyer thought you were trying to do, and no way I can tell how he wrote it up.
When one of my clients wants to change strategy in the middle of a Chapter 13–and lots do, because a lot of life can happen in five years–we usually can figure that out after about an hour long meeting.
Jeff
Robert,
Interesting blog you have here :). I filed bk June 10′ and was discharged Oct 10′. I did not reaffirm on my mortgage either but have been paying on it since- “pay to stay.” I called my bk attorney and he referred to it as a “de facto reaffirmation.” He basically told me the same as you have told people on here. But I like second opinions. As of three weeks ago I moved from Utah to Alabama for a killer job. I am maintaining payments on my house (included in bk) at least until I can get a deal closed for a new house. My main concern is, can the lender I bankrupted on ding my credit again for the foreclosure? It would be like a double jeopardy type thing.
So can they report a “foreclosure” on the already discharged mortgage? I too plan to rent my house at least until I get another closed as stated above. I’m taking a $350 hit just to have someone rent my house. My payment is $1343, and I’m only going to be getting a $1000. I’m willing to do this until my new deal is closed. Sorry, I may sound redundant. But judging from what I’ve read in your blog, it would be smart to continue to maintain my current payment to show rent or payment history, and then let the house go once a new deal is “Closed?” I just worry they will be able to double ding my credit on something that is bankrupted. Thanks in advance Robert and I appreciate what you are doing to help people on here. Thanks,
Jeff
Robert Weed
Jeff:
In the last week or so my understanding of this got a little better.
There are two different things involved in getting approved for a government guaranteed mortgage, which is basically all that’s out there.
First, is good credit. You can get back to good enough credit in two years after a bankruptcy, although for a lot of people it takes longer. That is off your credit score, your income, things like that.
But, there is also a “punishment” for letting a house go the foreclosure. I don’t see it named anywhere, which is why this is so confusing. So today at least I’m calling it a foreclosure LOCKOUT. You get locked out for three years after a foreclosure. That’s just a punishment for giving up on the other house, and it has nothing to do with whether you can prove you can afford the new one.
You will (almost for sure) find yourself in that three year foreclosure LOCKOUT if they see the that house that was in the bankruptcy has gone to foreclosure after the bankruptcy. And they will also, almost for sure, put you in that three year lockout if they see the house is going to go to foreclosure even if it hasn’t already. In other words, if you stop paying.
But what if it’s still current. What I’ve been told is they will still KNOW that the foreclosure is coming and so there will still be a three year lockout, and even though the three years haven’t started it, it still covers you.
At least one person posted on my blog that they were able to get approved and got that to work. I’ve been told that one way to dodge the three year foreclosure lockout is to have the old place rented, but it has to have been rented, that you can prove, for two years.
So your “main concern” is NOT a “credit ding”–at least the way people usually mean credit. (Credit meaning your credit report and credit score.) Your main concern is that three year foreclosure lockout. Maybe having someone renting it now, and having it still current, maybe that’s enough to have it slip through. But that is supposed to only work if it’s been rented for two years. Getting behind, I know, will sink you.
Jenni
My husband and I went through a Chapter 7 almost 3 years ago. We had a second home we let go, but we wanted to keep this one. We thought we “reaffirmed” it, as we went over that with the lawyer several times. The payment is not showing up on our credit reports and every month BofA has the notice attatched to the mortgage payment that basically translates…”to keep your home make the payments, if you walk away you are not obligated to pay due to your bankruptcy”. So, sounds to me like they never reaffirmed it??? (I’m sure I sound silly answering my own question, just looking for confirmation.) After what I’m reading it’s fine by me that it may not have been reaffirmed, I know my credit will rebuild one day and as long as I get to keep the house when it’s paid off is all that matters to me. Just curious on your thoughts.
Robert Weed
Jenni:
You understand your situation clearly. Only two things I can add. First, you need to check back with your lawyer to make sure you didn’t reaffirm. Relying on the credit report or what the bill says is not entirely safe. Talk to your lawyer who can check on about a minute.
Second, “credit rebuild one day”??? If its been three years, you should have pretty good credit today. Have you gotten and used and paid credit cards like I talk about here? https://robertweed.com/blog/after-bankruptcy/after-bankruptcy-getting-back-to-good-credit/
Linda
Your blog is so informative and helpful for those of us struggling- Thank you!
(I live in Northern Virginia)
I have a judgement of $39k filed and docketed in 2010, it was from an unsecured loan I fell behind on (among many other debts) when I went through a period of unemployment that year. I have been on a payment plan with them for almost 2 years but 2 other creditors have filed warrants in debt totaling another $19k that is forcing me to consider bankruptcy.
My question is really two fold:
First: I own a property with just under $20k of equity at current value less my first mortgage after taking into account cost of sale and trustees fees- Does the judgement count as a lien on my property for the purpose getting a chapter 7 discharge without the trustee selling my property? ($20k equity after 1st mortgage plus lien from docketed judgement of $39k would leave no equity for trustee sale I am assuming?)
And second: After my discharge, I assume that although the creditor can’t come after me personally that the judgement lien on my property will survive the chapter 7- I understand if I refinance or sell I will still have to pay the judgement off or settle it, but should I be concerned about the creditor trying to foreclose and force a sale in the future when I have a lower mortgage balance and the market (someday) has recovered and the equity is suddenly there? Would hate to go through bk and feel like I could still lose my home to a debt that was discharged!
Thank you in advance for taking the time to read my question- I really appreciate your help!
Robert Weed
Linda:
If you are PLANNING to file a bankruptcy, you need to talk to a BANKRUPTCY LAWYER to plan it with you. One purpose of this blog is to help you understand that these things take planning.
Thanks for saying I’m informative and helpful–but I don’t want you to be so informed that you think you don’t need to cover these things with your lawyer. You’ve got the right questions–you need to go to your lawyer for the answers.
Tammy D
Thank You SOOO very much for this info Mr. Weed. We spoke to a lawyer and to be honest she had ZERO clue about what to do . So … I’ve done a little digging on line and as of two hours ago … I sent certified mailed to all three crediting reporting agencies demanding that they remove the chapter 7 bankruptcy from both of his mortgages and how they are reporting inaccurate credit info. Also, I mailed in proof of payment history for both mortgages show current and always has been . I sent letters to the mortgage companies as well telling them they are `reporting misleading and damaging info to the credit reporting agencies …. and pursuant to my husbands rights under the FRCA act and they need to report accurately. Now Mr. Weed I hope this works ! Or do i still need a lawyer who practices in FRCA laws ?
Robert Weed April 28, 2012 at 3:48 pm
Tammy:
About fifteen years ago a Judge slammed each of the three credit bureau I think $5 million because they ALWAYS let one person’s bankruptcy leak over onto the credit report of the co-signer who was still paying. Exactly what has happened to your husband. The credit bureaus set up a whole new system, called Metro 2, to keep that from happening again.
And that worked, mostly. At least the the problem went from always to hardly ever. Hardly ever, though, is not the same as never; and that has clearly happened to your husband.
So he needs to get his credit reports. Annualcreditreport.com is a good place. Freecreditreport.com is NOT. And then check around for a lawyer in your area who does FCRA law. naca.net is one place to look.
Michelle
Hi Mr Weed,
My situation is the opposite. I filed chapter 7 bankruptcy in 11/2004. I never reaffirmed the mortgage, but still continue to make payments. The mortgage company is still reporting my payments to the credit bureau. Is this legal? If not what can I do to stop this?
Robert Weed
Michelle:
Well if you are paying on time, that’s helping you–so I wouldn’t do anything about it. If they are reporting you late, then you need to do Fair Credit Reporting disputes to the credit bureaus.
Kim
We filed a chapter 7 bankruptcy months ago, we chose to keep our home although we did not reaffirm it. We have both a first and a second mortgage on our current home. We were unable to put our 2nd into our bankruptcy because then we would have too much equity in our home for the bankruptcy. Currently we are late on our 2nd mortgage payment. If we do not pay our payment will the 1st allow the 2nd to take our home? We were hoping the 2nd would agree to lower our payments, but that has not been offered. What are their rights and will they take our home if we are still current on the 1st?
Thanks
Robert Weed
Kim:
Hundreds of people have asked me that question. Here’s my blog on it. https://robertweed.com/blog/chapter-7-bankruptcy/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/. You can read the comments and questions from people–and see how I tlaked aobut things differently depending on the details.
Basically it takes nerves of steel to NOT pay the second and wait to see what they do.
Sharon
” Reaffirming takes the house out of the bankruptcy.”
Ok, but what this doesn’t really answer, is that if I DID reaffirm, and it was approved by the Judge AND the lender signed and agreed to it, why is it still showing “Included in bankruptcy” on my credit report?
And why have they not been reporting my on-time payments every month? The whole reason I reaffirmed was to continue to receive good payment history.
Robert Weed
Sharon:
Let’s break down your question. “Why is it still showing included in bankruptcy on your credit report?” Because they are goofballs!
“Why have they not been reporting my on-time payments every month?” Because you haven’t done disputes WITH THE CREDIT BUREAUS, followed, if necessary, by suing them.
Send a dispute letter to the credit bureaus, laying out that you did reaffirm the debt. Include a copy of the court docket showing that. Send it certified, keep a copy. When that doesn’t work, and it probably won’t (at least not with all three bureaus), go to the National Association of Consumer Advocates and find a Fair Credit Reporting lawyer in your area. http://naca.net/find-attorney
Sharon
Mr. Weed,
Thank you so much for your response! After I submitted my question, I realized there were over 300 comments, so I went back to the beginning of them and started reading. I found that your blog has been more informative than any of the attorneys I have contacted locally. I am eternally grateful.
I do have one other question.
IF a reaffirmation doesn’t change the “included in bankruptcy” on the credit report, and it doesn’t force the lenders to abide by the original terms (meaning to continue positive reporting of my payments), then why on earth would anyone ever reaffirm? It looks as though a reaffirmation ONLY benefits the lender.
The attorney we had, advised us that the reaffirmation assured us of the continued good payment history being reported. That was the ONLY reason we reaffirmed, and because we had a large amount of equity. We wanted the lender to know we were serious about keeping the property.
Incidentally, our BK was final in 2005 prior to the new BK laws. Does that make any difference on the handling of reaffirmations?
Sharon
Sorry, one more…
Should the reaffirmation change that status out of “included in bankruptcy” or is that there regardless?
Sharon
I guess the answers to my previous questions are unknown. However, I would like to share something that happened so that it may help others.
The BK was originally filed in August of 2005. I pulled credit reports in the early part of this year, then again in June. Up until the June report, it was showing as “included in bankruptcy” even though we had reaffirmed.
Then on the June credit report, nothing at all showed up.
I decided to pay for a new report. Low and behold, not only is the mortgage showing now, but it is as if it never went into bk! I have NO idea why this happened, UNLESS it has something to do with the 7 year mark.
And this was on both available credit reports that score (Experian no longer does true consumer scores).
Regardless, we are refinancing right away, while it is showing up. JUST IN CASE they decide to do something bad again, and start reporting incorrectly.
Good luck to everyone.
Steph B
My question is I filed my bankruptcy in 2002, it is now 2013. The interest rates are alot lower now and I want to refinance but without them reporting my payments for the past 10 yrs everyone keeps telling me there is nothing they can do. Is this true? Is it just pointless to stay in this house with an interest rate of 7.2%. I understand they cant report the payments but I thought it would have a cap on it like after 7 yrs they would start reporting again. I live in Missouri and I just so confused. I just want a cheaper house payment, we are staying here and just need to know what I should do.
Robert Weed
Steph
I’m puzzled that you have not been able to get a mortgage…so I’m partly wondering about whether you are dealing with mortgage people who know their business…and I’m wondering about whether you have carefully rebuilt your credit. Or are you in an area where values have fallen below the 2002 values….that’s very unusual. There’s some factor at work that I don’t understand.
As to your payments on your mortgage, you can get a history on your account by writing a Qualified Written Request under RESPA to the mortgage company. You can sue them if they don’t answer. http://en.wikipedia.org/wiki/Real_Estate_Settlement_Procedures_Act
Brad
Hello Mr. Weed,
The above articles contain some very good information I was not aware of and have been searching for answers to. I just completed a chapter 13 and was outraged to find that my mortgage lender has indicated to all three credit reporting agencies that our (my spouse and I) mortgage balance is 0! We’ve been paying our mortgage, on time, throughout the bankruptcy but now find out that this information is not being given / shown to the credit reporting agencies. I found this out when I started looking into refinancing our home. To complicate things, I only filed Chapter 13 and my wife did not but both of our names are on the mortgage.
I have a couple of questions….
1. Can I get the credit agencies to see that we indeed have a balance on our current mortgage and have been paying on time?
2. Can we refinance our mortgage at this time?
3. I’m assuming that since my wife’s name is on the mortgage that credit agencies see the 0 balance – no payments for three years – so it’s hurting her credit as well?
Thank you Mr. Weed
Robert Weed
Brad:
Chapter 13 does NOT discharge your mortgage–Chapter 7 does. So in your case the credit reporting is wrong. You want to write to the credit bureaus–NOT the mortgage company–and ask them to fix it. Give them two chances. If that doesn’t work, see a lawyer who does Fair Credit Reporting law. One place to look is NACA. http://www.naca.net/find-attorney
Tammy
Mr. Weed – I live in NY state – My chapter 7 bk was discharged in Dec of 2011 and i am trying to rebuild my credit. I recently refinanced my FHA mortgage to 4.5 % which was included in my bk. (in other words, I did not reaffirm my mortgage or my car loan and continue to pay both on time but get no credit for it) My question is: Now that I have refinanced, does that automatically make me responsible for the loan? Or is it still considered ‘unaffirmed” and wont show up on my credit report as timely payments? My credit score never dropped that low b/c even tho I ended up filing chap. 7, I never missed a payment and was never late on my credit cards up to the day of filing – but I was in too deep and new what i was facing so I filed before I got to that point. I think that has helped with my credit score.
Robert Weed
Tammy:
First, you are right about your credit score–if you stay current up to the moment of the bankruptcy your score recovers really quickly. Most people can’t do that, but it’s great if you can.
On your big question, it depends on what you mean by “refinanced.” If you made a new agreement with your old mortgage company, then it’s still covered by the bankruptcy. It’s not reaffirmed. If you went out to a new lender, then you have a new after bankruptcy debt.
Kellie
Mr. Weed, We filed Ch. 13 in 2006 that was discharged in 2011. My mortgage company has not been reporting to any of the credit agencies. I keep getting the run around from the mortgage company as to why it’s not reporting. I then called Experian. One person at Experian told me that the mortgage company cannot legally report our mortgage and the other person told me that they couldn’t help with getting them to report it because it’s not reporting to them at all. My lawyers office told me it should be reporting and that I need to write the credit bureaus. I’m so confused. Help!
Robert Weed
Kellie:
Are they reporting “discharged in bankruptcy.” That would be wrong and you should dispute it.
But if they are just not reporting, they don’t have to report. There’s no requirement that any creditor participate in credit reporting; and if they are not sure the right way to report after a chapter 13, just not reporting would be legal.
Sang Perkoski
It’s very satisfying to see a post from an author who is clearly knowledgeable and passionate about the subject matter. Top-Notch article!
Robert Weed
Sang:
Thanks!
Mary
I live in NJ and my house was discharged in bk in 2010, I have remained in the home and have been making the mortgage payments. My question is, if the house is written off in bk then where does the principle go? I understand making the interest payment but is it legal for the investors to accept the principle on a property written off?
Robert Weed
Mary:
That debt is not written off…they cannot ask YOU to pay the debt. But the debt is still attached to the house. Same as before. Same debt. Same principal. Same interest. And same right to foreclose. The only difference–it’s a big one–they can’t come after YOU if you don’t pay.
Michelle
We filed Chapter 7 in 2005 and were discharged in March 2006. We have stayed in the same home making payments on 2 mortgages with over 8% rates. We never reaffirmed either mortgage. One company does not send notices and does not allow us to make payments online due the bk7 and no reaffirmation, and the other company sends us updated info and will allow us to make payments online if we wanted to. They also contact us by phone if we are late on a payment. I did not think they were allowed to do that, but….
My question is: We are struggling and have been for a long time now due to 4 different work layoffs since 2009. We managed to still live in the home and did not foreclose, because one bank gave us a ridiculous modified loan that we are paying $1 less than our last mortgage payment, with the same rate. We paid for this home for 13 years so far and due to late payments and almost foreclosure, it has been modified for 39 years and now only $3.50 goes toward principal, when before we had it down to payment mostly interest. It is not worth it to us to keep this up. CAN WE SELL THIS HOME? Can we try to purchase another home with a lower rate? Our credit ratings are not that bad and we have paid of credit cards through the years and bought and paid off a car, and now about to pay off another, and paying on another with no late payments. I am just wondering if we are wasting our time making payments on this home and struggling like this. Will a new mortgage finance company call our current companies to find out about payments since we have been in this home since we filed bk 7.5 years ago, but did not reaffirm? Can a new company even look at that info, due to not reaffirming? Thanks for your time and all the great info. you have shared so far. Oh, to let you know we are in Louisiana
Robert Weed
Michelle:
Good questions!
Really boils down to two things.
Can you sell this home? YES, if you are able to get more than you owe on it, then you can sell the home–any profits belong to you.
Can you purchase another home? Well, that depends on three things. First, your credit score, have you built back to good credit with credit cards and paid cars. Second, income–they don’t lend money any more just on score, they look at income.
Third, your history of mortgage payments. Your credit report will, should NOT be showing paying, current or late, since the bankruptcy. It should just be showing bankruptcy. But the new lender will want to know. You’ll need to give the old lender permission to give that info to the new lender–and then see whether they like what they find out or not. Or you can get the info yourself by making a qualified written request under respa. http://en.wikipedia.org/wiki/Real_Estate_Settlement_Procedures_Act.
Good luck!
PS If your credit is good enough to buy a new house (is it?) and you have equity so you can sell (do you?), then you should be able to go out and shop for a new loan on your existing home. If you still like the house, that would save you the trouble of moving.
If your problem is that you don’t have any equity–the value has fallen too much–then you can’t do a regular sale. Meaning you would have to do a shortsale and the lender has to agree–the bankruptcy doesn’t change that. If you do a short sale, you can’t get approved for a new mortgage for two years.
Shannon
I was discharged from Ch. 7 in Oct 2012 and did not reaffirm my home or car and had planned on staying in my home until i had a sudden death in family and need to relocate. My question is can i just walk away, and if so how long can i stay in the home w/out paying my mortgage before they do the foreclosure process? Thank you.
Robert Weed
Shannon:
You were smart to NOT reaffirm the house. That’s why you can walk away and owe them nothing. (If there’s an association you need to keep paying that.)
How long can you stay without paying. That’s VERY hard to predict. I explain some of that here. https://robertweed.com/blog/after-bankruptcy/file-bankruptcy-stop-paying-dont-leave-that-house/
It also varies a lot by state. Almost everywhere is slower than Virginia, where I am.
Shannon
And of course that is also exactly where i am as well!
Susan
Hello! We filed bankruptcy 3 years ago. Since then our daughter fell ill and so did our credit, the good news is that she is in great health and thanks to a family gift we are completely debt free. We didn’t affirm our house in the bankruptcy and still live in it. We are looking for a new home now, and have the credit to get a good rate. I have to admit since we knew the mortgage wouldn’t report to the credit agency, it was the first thing I let slide when my daughter was ill. Catching up when we could. Completely caught up now, but when our new lender discovered we were late on it, decided not to offer us the mortgage. Since it’s not reported am I obligated to tell them of the mortgage, and will all lenders consider it in accepting or denying a new mortgage or even refinance? Thank you in advance for the help!
Robert Weed
Susan:
They will see it even if you don’t tell them. And so it will be really hard to get a mortgage approval. Maybe impossible. The general rule is you can get approved two years after the bankruptcy, but it needs to be three years after the foreclosure–and if you had a house that was in your bankruptcy, they just look at that as a foreclosure that hasn’t even happened yet.
Sometimes, some people get mortgage approval if you can rent the house for enough to cover the mortgage. A lot of places rents are high, but I don’t know how things are where you are.
Lisa
In 2008 my husband and I filed bankruptcy. Included in that was our ‘old’ house and other bills. Since the bankruptcy we have been on time with the mortgage payments for our ‘new’ house. Recently we tried to apply for a car loan and was turned down. After pulling the credit reports, I found that our mortgage is listed as part of the bankruptcy. Based on advise from the bankruptcy lawyer I contacted the three credit agencies. All but one fixed the issue. The third agency says that the mortgage company told them the information on the credit report is correct-that the ‘new’ house was part of the bankruptcy. I told this to my lawyer and he wants to discuss filing a FCRA claim against that agency. He believes the problem lies with them and not the mortgage company.
I haven’t sent this information to the lawyer yet but I noticed on my monthly bill from the mortgage company that it has wording typical of what you’d see from debtors during a bankruptcy. “This is not an attempt to collect a debt” kind of thing.
Does what the lawyer wants to do makes sense or sound right? I have read so many things on it should be the fault of either party that I don’t know what to believe.
Robert Weed
Lisa:
Sorry I can’t encourage you. My position is that the credit reporting is right.
There are SO FEW bankruptcy lawyers who will fight the credit bureaus, you are really lucky to have one. But on this one, I think the credit reports are right. sorry.
Lisa
I would assume that the courts would have contacted my mortgage company when the discharge occurred so I wonder why they are still showing that we included them in the bankruptcy. I guess I should call the mortgage company?
Kim
My husband and I fell behind on our mortgage payments so we filed a chapter 13 about a year ago. Included in the bankruptcy were our arrears from the mortgage. We have made on time payments every single month without fail and the mortgage company is reporting 180 days past due!! Is that legal?
Robert Weed
Kim:
I don’t think so, but the two judges where I fought it have all gone against me.
Here’s where I explain it. https://robertweed.com/blog/chapter-13-bankruptcy/chapter-13-bankruptcy-and-your-credit-report/
Kim
Thank you for your quick response! We are having to fight the mortgage company anyway because we also found out they were holding mortgage checks for up to three months and the reporting them late or missed even though they deposited our checks on time! So, I think they have issues with their accounting dept. thanks again for the quick response. Is this something that we can sue them for?
patrick
thank you for the information on this page. I do however have a question.
I did not re affirm and am wanting to sell my house will I have any difficulties at closing? Thank you
Robert Weed
Patrick:
No you shouldn’t. Reaffirming or not has NOTHING to do with problems at closing when you go to sell. (You might have other difficulties but not that.)
Kristie
Our BK was discharged in Feb 2011. We thought we had reaffirmed on our home, and was never told before the 341 meeting that the attorney never received the agreements back from both the lenders (we had an 80/20 mortgage). We found out about 6 months after the BK had been discharged. We stayed in our home, made all our payments on time. We are now trying to refinance and got a call last night from the lender stating that if the mortgages were included in the BK that we can’t refinance until 2/2014. We also never received a copy of our BK paperwork which we have no problem going to get. My question is will the mortgages show up on our BK or will they show up that we attempted to reaffirm on them. I am not really sure what the new lender is asking us for. We are tired of paying such high interest rates and refinancing would be saving us 400.00 a month in payments.
Robert Weed
Kristie:
I’m not sure what the new lender is asking for either, so you might want to try another new lender and see what they say.
Also, have you looked to see if you are eligible for HARP or HAMP with the lender who was in the BK.
Do you have equity? If you do, you should find people willing to refi you two years after the BK. If you don’t have equity, then FIRST you should be really glad you didn’t reaffirm, and second nobody is going to refinance you–but you should see about HARP and HAMP.
Danise Tucker
Lot’s of great information here. I’m sort of stuck in the middle. My Chp 7 was discharged Dec 2011. I kept my home but did not reaffirm (didn’t know I needed to at the time). I’ve been paying the mortgage this whole time and of course it’s reported as “included”. Now I’m wanting to keep the home as rental property and purchase a new home (2 yrs later). My mortgage is with B of A and they are a hot mess. For mths my pmts were being posted completely to my Escrow acct. This happened more than once and was only corrected after receiving Foreclosure paperwork and making them fix it. Like everyone else. I’m made to mail the pmts in (no more online pmts). They post my pmts sometimes 2wks after they are mailed out. My loan officer is telling me that I have to sale my home in order to get a new mortgage since this one is “included”. I’m afraid if I do that, I’m going to be denied for a loan and have no where to live. Help!!!!
Robert Weed
Danise:
First, if BofA was posting your payments to your escrow account and they sent you are foreclosure notice, you should see if your BK lawyer is willing to go after them for violating the BK discharge. As I explain here it’s not totally clear that the BK judge has jurisdiction https://robertweed.com/blog/after-bankruptcy/after-bankruptcy-bank-of-america-cant-stop-themselves/ but I think the should be forced to explain themselves. Some judges would be really mad at them.
During the crisis part of the problem is WAY TOO MANY people had WAY TO MANY houses–and the mortgage comnpanies are right to be paranoid aobut that now. I’m told, I’m not a lender, that you’d have to have a two year history of collecting rent on the property you want to keep as a rental before you can get a new loan to buy a new place now.
So selling it is the way to go–if there’s equity and you can. How bad do you want to be a landlord. Or stop paying, move out when they toss you out, living for free as long as you can https://robertweed.com/blog/after-bankruptcy/file-bankruptcy-stop-paying-dont-leave-that-house/.
Are you thinking of renting because there’s still no equity….then you should be really glad you didn’t reaffirm. You still wouldn’t be able to buy now and you also wouldn’t be able to mvoe out–you’d be stuck.
David B
Mr. Weed first off thank you for the informative blog site you’ve created. My question is this: I planned to reaffirmed two vehicle loans. I recently found out that they were both discharged through my bankruptcy? Is there anything that can’t be done about this. I planned on keeping both. I spoke to my lawyer and in short he said to keep making payments and good luck. Is this justified? I live in Virginia as well. Thanks again
Robert Weed
David:
Ford Motor Credit will always repo a car that’s current, unless you reaffirmed. I also see that from Alaksa FCU and Suncoast FCU.
Suntrust used to, but I’ve seen somewhere that they stopped. That’s all I know.
Except this, anyone will be SUDDEN to repo you if you get even a few days late.
Jarrod P.
I’m in the State of Oklahoma and feel I have a relatively good grasp of the concept concerning Chapter 7 Bankruptcy, reaffirmation, non-reaffirmation (in my case), and what foreclosure looks like in those situations.
In 2007, I was faced with the reality of filing for bankruptcy. My home, of course, was included and the debt for the mortgage loan was discharged. During the bankruptcy process and even to this day, May 18th 2013, I have remained current on my mortgage payments and the property is my primary residence. I have never signed a reaffirmation of the mortgage loan, as the home is older and its value is less than the mortgage loan amount.
I have been happy in my home basically paying “rent” to my mortgage company to remain in my home and not have the lender foreclose on the property. I understand I am not liable for the actual debt of the mortgage since the debt was discharged and understand that the only thing the lender could do at this point would be to foreclose to obtain rights to the property. I also understand that even though I never signed a reaffirmation agreement, I am entitled to sell the property since the title is still in my name.
My question is this: I know if I were able to turn a profit on the sell of the real property, I am entitled to keep the excess funds after paying the mortgage loan off BUT for instance what if I owe $100,00.00, but am only able to sell the property for $75,000.00? I’m assuming that after the closing of the sell, the property would then be out of my name and since there is a discharge for my mortgage loan, the lender would have no case to file against me in my local circuit court, but I want to confirm that.
My hope is that I can peacefully release this property and avoid a foreclosure being filed against me. Even though any foreclosure at this point would just be to gain rightful title on behalf of the lender, a foreclosure on my credit report(s) would be detrimental to my already-tarnished credit score due to my 2007 bankruptcy.
Please advise. Thank you for your time.
Robert Weed
Jarrod:
You’ve asked a good question and you do have a good grasp of the issues involved.
What you are trying to do is what I’d call an after-bankruptcy shortsale.
In most shortsales, the homeowner needs to get real clear whether the mortgage companies are agreeing that after the shortsale you don’t owe them any more money. Everybody who wants the deal to go through, sometimes including your own agent, has far less interest than you do in making that clear.
In an after bankruptcy shortsale, that problem goes away. You already DON’T owe any more money, so you don’t have to worry about that. But otherwise, it’s still a shortsale. The bank can say yes, or no, depending on whether they think they are getting a good deal.
Now, if you just walk away (and walking away after bankruptcy is your bargaining power) you do take a hit, but NOT on your “credit report” and “credit score.” Your credit report is showing bankruptcy, even though you are paying, and if you stop, it will still just show bankruptcy. No change there.
The change comes from the loan regulations from Freddie Mac and Fannie Mae. They won’t approve a loan until at least two years after your bankruptcy–that’s long past. But it also have to be two years after this house is out of your name from a shortsale, or three years if there’s an after bankruptcy foreclosure. That year advantage is the reason trying for a shortsale may be worth the trouble for you.
matt
hi I live in Arizona and I’m under Chapter 13 I make my monthly payments to bankruptcy but last July I lost my wife of 25 years to breast cancer my question is I make the monthly installment to bankruptcy but I’m having a hard time making my mortgage payment I recently got the second paid off through bankruptcy I have 8 months left in chapter 13 at this time would it be easier to walk away from the house or stick it out till foreclosure when Cindy pass I lost half my income and I’m raising two teenagers any suggestions would help
Robert Weed
Matt:
I’d need to look at your Chapter 13 plan to be sure what to do. There’s a good chance you are right–without your wife and your wife’s income, it may not make sense to stay in Chapter 13. But I don’t know what else was in the Chapter 13. Were you paying taxes through Chapter 13? Well your car get repossessed if you get out of Chapter 13? I’d need to see all your papers before I could help you decide what to do.
You need to go over all this with a lawyer there.
Andrea
We live in NC. Filed BK in 2009 to eliminate credit debt after job loss. Planned all along to keep house and was told nothing of reaffirming. Got new job, kept house and are now at 12 months current (no lates). Want to request removal of PMI due to some existing equity and an addition we just built (pool house). Chase says we cannot request to remove PMI or refinance without reaffirming. Is this accurate? Removing the PMI would decrease our payment. We have a child starting college and chose to put money into building the addition to do just that (remove PMI & reduce pmts). Now after reading this site, I’m concerned about reaffirming even tho we plan to stay in our house for a long while.
Robert Weed
Andrea:
Once your bankruptcy is over you can’t reaffirm, so no need to think about that.
After four years, if you’ve built up equity and good credit, talk to another bank. Shop a couple and see who offers you the best deal.
Dave
Filed Bankruptcy and had the house re affirmed. After reading up on this. I see that payments are not included on credit reports anymore. We called mortgage company to check on late payments and how much we owe and they state we are not liable for the loan anymore. Our bills state, this is not an attempt to collect payments. So if we re-affirmed and we are not liable to pay this loan. Can I just leave the house and let the bank have it? We live in Indiana and everything was discharged in 2010.
Robert Weed
Dave:
Why do you think you reaffirmed the mortgage. I NEVER let me clients reaffirm a mortgage and no lawyer in their right mind should.
You need to go back to your lawyer, or some lawyer their, to look in the court records and see if you reaffirmed. The mortgage company doesn’t think you did NOT. We hope they are right.
If you did NOT reaffirm, you can just leave the house and let the bank have it. If you did, you have a problem.
Dave
Interesting… My wife had a friend and they were able to check on that for us. According to the records, The van was re-affirmed, but not the house. But we paid money to have the house re-affirmed. Not sure what to think about that , but in a way, this could be a good thing. Thanks
Robert Weed
Sorry they charged you for something they didn’t do. but GLAD they didn’t do it.
Michel
I’m in Texas.
I had my Chapter 7 discharged in 2010. I had reaffirmed my mortgage and my car notes. My mortgage has since been bought out 3 times and none of the companies have reported my on-time payments made since my bankruptcy.
I’m trying to rebuild by credit. I have since transferred my car note to my Credit Union and the car payments have been reported to the Credit Bureau.
What can I do to have my mortgage payments reported to the Credit Bureau?
Thanks in advance.
Michel
Robert Weed
Michel:
Thanks for your question. First check with your lawyer and make sure you reaffirmed the mortgage and it was filed with the court. Get a print out of the court docket that shows it. (It is almost never a good idea to reaffirm a mortgage in Virginia, but the Texas homestead would mean in your state there would be a lot of times when it would be smart to do.)
Then write letters to the credit bureaus, showing the reaffirmation, and ask them to remove the Discharged in Bankruptcy code (assuming that’s what they are showing) and report it as current. Send it certified, keep a copy. (Send a copy of your letter to the mortgage company.) When that doesn’t work, send a second letter.
When that doesn’t work, find a credit report lawyer in your area to go after them. One good place to look for credit report lawyers is here. http://naca.net/find-attorney. Good luck!
Michel
Thanks so much.
I received the copy today from my attorney. It specifically shows that I had reaffirmed the mortgage note. I will follow up on your advice and get a copy of the court docket. I will also get with the credit bureaus and the mortgage company.
Once again, thank you for your willingness to assist me.
Michel
Roger
I filed chapter 7 in 2009, And untill now I just found out about the reaffirming thing. I went to call my lawyer only to find out he passed away last year. I have an underwater mortage and was looking into doing a refi and I noticed my interest paid to principal was odd. Each month my principal goes up and down. After almost 8 years of paying and thinking we had a fixed rate we found out it’s an annual rate. Long story short we are non fha backed even though I was told as closing we were along with the fixed rate. I thought the lawyer there was for us but they were for HSBC. I know I signed the contract, but I would never have done it had I known it was not a fixed rate and fha backed.
I am wondering since we did not reaffirm does this mean foreclosure is not an option and if I can’t make payments do I just walk away? I want to keep our home but the loan, condo fee, taxes, and insurance is 68% of our income and I am struggling. Any help would be appricated.
Thank You
Roger
Robert Weed
Roger:
Not sure what you mean when you say, “foreclosure is not an option.”
Since you did not reaffirm the debt, you can stop paying, move out when they kick you out (usually six or more months in Virginia: don’t know where you are) and owe them nothing. (You have to pay the condo until there’s an actual foreclosure so don’t move out early.) I explain more of that here. https://robertweed.com/2011/05/18/file-bankruptcy-stop-paying-dont-leave-that-house/.
Because you are dealing with HSBC, who are among other things, not the most reputable bank in America, they MIGHT offer you a deal–lower payments if you keep paying. You can’t count on that, but you can ask. If you do get a new deal, it is still covered by the bankruptcy. So you can safely move out later if you can’t afford their new offer.
Check around on other places to live, but don’t move out. Stop paying but tell them you will pay if they agree to a smaller amount that you can afford.
Good luck.
Roger
HSBC will not answer questions they say I have to fax them and those go unanswered. They typicaly do a 6 month loan mod only and I guess from everything I read you can only do it a max of 4 times. They lower it on average $200.00 per month, this does not help as it’s a bandage to the problem.
I paid the lawyer at closing $190.00 even though I thought he worked for me he worked for HSBC.
Also I am told not not foreclose as it would hurt us real bad??? Not sure why as for 4 years it’s not being reported to improve e credit for over 4 years. It seems places only help if you are in default and we are current in our payments.
I tried calling the AG’s office to maybe file a complaint of predatory loan and they did not even want to hear me.
I can’t even find out why holds the mortage as I did a Merc and wells farge shows up and I never used them for a mortage, though they were part of my bankruptcy for credit cards.
Roger
Mr Weed
When I bought the condo I had a 1st and 2nd mortage I thought the 80% one was a company called amar something ( I can’t remember and the other was GMAC for the 20% one. The loan was in my name only not sure why my wife was not allowed on it but anyway the laon exceeded my income total payments were about $1250.00 not including condo fee or taxes. If Wells farge was indeed the lender on the 80% part how could they have given me a loan and also GMAC like that? I never thought about it till now to be honest…
Roger
Well I found out it was Americasse a division of Wells Farge…
dave
what if I sold my house today and got a great amount of equity back from the sale and then tried to buy a house later with that equity like 40 % down but dont mention the past house or show them my past payment history just try to have a clean slat and move on since it doesnt show up on my credit report ..is that wise or can I do that ..my credit score is 680 and I filed four years ago, some bad payment history in the past 12 months so I would rather not say anything to get my pre-approvel
Robert Weed
Dave:
I don’t like people who talk about “don’t mention” and stuff like that. So I’m not sure where this is headed.
You can get approved for a mortgage two years after a bankrutpcy and you are saying it’s been four. If you can sell your house and get equity out, then obviously that’s not a problem. But what should you put on your loan application?
Well, as a lawyer, I like the truth. And also, since I am a lawyer, I can’t tell you the best strategy to get approved on a loan. I can tell you what the regulations are, but I don’t know about underwriting standards, which is really your question.
dave
sorry Mr.Weed and thank you sir….what I’m trying to say is if the mortgage does not show up on my credit due to the bankrupcy but my credit has improved to 684 and my income is where it needs to be and it’s more then four years ago, can I sell my house and try to get a home loan without bring up my past
Robert Weed
Dave:
Loan applications are pretty thorough now. Your important question is not can you “try to get a loan without bringing up your past.”
The important question is, will you be able, with that past, to get a loan. I’m guessing the answer to that is, yes.
But the way to find out is go talk to some lenders.
Dave
Thank you Mr. Weed I love your Blog
Christopher Landis
I filed bankruptcy last year. Stupidly, I reaffirmed my car in the bankruptcy. What will happen if I stop paying and let the car go back?
Robert Weed
Chris:
If you reaffirmed your car in the bankruptcy and now stop paying, it’s like the bankruptcy never happened. They repossess the car and sell it. Then they sue you, hit your credit, and probably garnish you, depending on what state you are in, until the car is paid for.
The last thing you want on your credit is an after-bankruptcy judgment: then your credit is really wrecked!
Roy
Mr Weed We live in Illinois and our chapter 7 was discharged Feb 2011. We thought we reaffirmed our mortgage with Bank of America. Last week we tried to refinance our mortgage for a lower rate and were denied. We were told that our loan was never reaffirmed with BoA and that until we could get that loan reaffirmed we will not be able to get another loan. Is this true? If not when will we be able to refinance? The attorney that did the bankruptcy is no help at all. He he can’t find the copies of the reaffirmation contracts and basically gave us the brush off. We like where our house is and don’t want to leave but we would like credit for making payments and would like to be able to refinance to get a better rate.
Robert Weed
Roy:
Once the bankruptcy is discharged legally it’s not possible to reaffirm.
Since it’s been two years after the Chapter 7 discharge, you’d be potentially eligible to refinance the house–to get a lower interest rate. BoA con’s refinance because they were in the bankruptcy.
But the universe is full of banks. shop for a new mortgage somewhere else.
chris downs
I filed for chapter 7 a month or so ago. I was wondering currently i am paying on my house. but i wanted to be able to get a loan for another house. if i stay here for 3 years after my discharge can i get a loan for a house? or do i actually have to be out of this house and be foreclosed on? hope i made sense…
thank you very much for answering everyones questions on here
Robert Weed
Chris:
That’s a question that comes up as lot. My best understanding is that you can’t get another mortgage loan until three years after this house is foreclosed. The purpose of that regulation is to force you to rent for three years, before you can buy again, if you are giving up this house. (It’s only two years if you can put together a shortsale.) There are scattered comments on my website and other places from people who think they have worked around that. Most of the time those fall through at the last minute.
Karen Hufman
I made payments on my house for over a year after bankruptcy was final, not realizing I wasn’t liable for house anymore. I’ve stopped making payment in last 4 months and foreclosure process is starting. My question is.. am I entitled to get the money back that I paid after bankruptcy was final?
Robert Weed
KAREN:
Nope, don’t think so. You had the right to keep the house as long as you paid, so they will figure you were paying for the right to keep the house.
Roger
Mr Weeds
Since I had chapter 7 over 3 years ago would I need a lawyer if I foreclose? If so what can I expect to pay? Also is the process of filing foreclosure a long one? I hear 6-9 months but after looking it up it seems 3-4 months?
Emi
We did bankruptcy in 2009 and mortgage was included. Right now we sokd the home for more than we owe and tried to prequalify for new mortgage and we were told that after we sell house it will take 3 yrs to get new loan beacuse not reaffirming mortgage is same as foreclosure but it does not start ticking until we sell house?? Is this true? We want to get new home can we apply after house is sold? Please help!
Robert Weed
Emi:
I’m a lawyer, not a lender. but I think that’s NOT right. Try another bank. As I read the regulation its two years after the bankrutpcy–you got that. And you only have the lockout they lost money on the mortgage. I don’t know for sure, but I think you should try another bank.
Emi
Thank you for your info. I called lender and they said once i sell house which closing is Aug 5 th of this month it would be from that date 3 yrs before i could get a loan because we didnt reaffirm loan it counts as foreclosure. I thougjt once we had bankrupcy discharged and no foreclosure on house that it counts from the date of dischareged bankrupcy? I guess my question is , is that true that if we dont reaffirm it counts as foreclosure anf starts from the date you sell house? Also, if house is not showing up on credit report why do lenders care at all? I appreciate any help! We have been told so many different stories thaty head is about to explode.
Amy
Hi Robert,
I filled for bankruptcy and it was discharged in October 2011, however, my husband was not part of the bankruptcy. In April 2012 we started a trial payment period on our home (we live in California) and successfully did a loan modification in July 2012. My problem is, our credit reports both show that the last payment was made in September 2012 (with 30 days late showing October 2011) and then the reporting stops April 2012. Since I was the only one that filed for bankruptcy, shouldn’t the loan show current for him and adversely for me? We really want to improve our credit and we’re not sure how to do this without the home payments showing (at least on his part). Any information you can provide would be very appreciated. Thanks.
Robert Weed
Amy:
Yes the loan should show bankruptcy on you and current on him. Write to the credit bureaus with a copy to the mortgage company for him and see if they fix it. That has some chance of working.
If that doesn’t work, you can write to the mortgage company and say this is a RESPA request please send me the status of my account showing I have been current since July 2012. (They are allowed MONTHS to respond to a RESPA request–that’s one of the things the controversial Consumer Financial Protection Bureau is trying to fix.) Then send the RESPA results to the credit bureaus.
Your problem is they are not required to report. So if they get themselves confused–hey, she filed bankruptcy, he didn’t–one thing they can legally do is just stop reporting.
Amy
Robert,
Thank you for the response. I will follow your directions. My other thought is to reaffirm the loan (my understanding from your forum is that the modification from last year did not reaffirm loan). Our loan payments are completely within our means and the loan amount is less than the homes value. What are your thoughts? Would reaffirming the loan mean that they would report timely payment to the credit bureaus? How would I go about reaffirming? Thanks again for your time.
Amy
Amy
Robert,
Sorry, one more question (for now ;). Your site states that you recommend building credit to your clients after bankruptcy, what are the best ways to do this? I have student loans (current) and the home loan (not being reported), any suggestions? Thanks.
Robert Weed
Get two or three credit cards; charge gasoline every month; pay them in full every month. You have probably gotten some credit card offers in the mail, but if you haven’t, you can go to bankrate.com go to the credit card page, and look for credit cards “for Bad Credit.”
Robert Weed
Once the bankruptcy is discharged, you can’t reaffirm the loan. At least the law is clear you can’t and my judges here are clear you can’t. The mortgage companies say there are some judges somewhere that allow it; I haven’t seen it.
Mike
My wife and I filed for chapter 7 in 2008 discharged Jan 2009. We worked out a payment arrangement to get the loan current and have made all payments on time since then. In march another company purchased the mortgage and they started to report it too the credit companies. My score had reached 697 and we went to the credit union to attempt to refinance. When the credit union pulled the report the next day it had dropped to 633 because the mortgage holder had changed the reporting from paid as agreed to included in bankruptcy with no payments no longer showing. I pulled my own credit directly from Equifax the day after and the score at that point had dropped to 591. The only change in my credit report was the mortgage. Do we have any recourse against the mortgage company for changing the way they are reporting it. We definitely want to keep the property as we have about 60% equity in it at this time.. We are fortunate in that we have equity and we are located in Spotsylvania VA any suggestions on how to deal with this would be appreciated.
Thanks
Robert Weed
Mike:
Sorry, I can’t encourage you. Included in bankrutpcy is the right way to rpeort it, even if it is current. It helped you when they were reporting it as current, and we’re sorry they didn’t keep it that way, but there’s no recourse that I know of.
Doug
Robert:
My wife and I filed BK and it was discharged in 2003. We are in Ohio. We did not reaffirm our mortgage with Bank of America. We continued to live in the house and made payments until 2011. I lost my job and had to accept a transfer to another state. We stopped making payments and probably didn’t make a payment for at least a year. BoA put us in a loan modification that took forever to go through. It finally went through in September of 2012. Around that time I got the chance to transfer back to Ohio so we did. I came back and stayed in the house for a couple of months and when the family came back we moved into a rental here. We had a gentlemen’s agreement with another couple to purchase our house on a land contract, but that fell through. Our old house needs quite a bit of work (which is why we didn’t move back into it when we came back) and we have not been able to make a payment on it for a few months now because we are renting another house that we live in. We tried to keep up the payments on the loan modification, but it seems we’re right back where we started.
Since we did a loan modification are we back on the hook for this house? Our BK just fell off earlier this year and so I hate to take another 7-10 year ding on our credit report. Are we able to just walk away from it and if so, will that negatively affect our credit since it was not reaffirmed and it has been 10 years since our BK. I just have a feeling that the loan modification will end up hurting us. I have thought about trying a deed in lieu, but I definitely don’t want to go that route if the loan modification didn’t renew our affirmation.
Any help would be greatly appreciated!
Robert Weed
Doug:
If you did a loan modification but did NOT reaffirm the loan then you are NOT back on the hook for the house. Don’t worry. They can foreclose but they cannot, legally, hit your credit or come after you for payments. (You should check your credit report just to be sure and talk to your bankrutpcy lawyer or a credit report lawyer if they are.)
Doug
Thank you Robert!
So, it sounds like we would see our name in the paper and get a public record on our credit report for the foreclosure, but that’s about it? I hope I am correct in that.
We did not reaffirm, which is probably why they let us keep the house and do a modification after not making payments for a year.
I was planning to call them and offer a deed in lieu to expedite the process. Do you think this is a good idea?
Thanks again!
Bianca
I filled for bankruptcy in 2012, how do I check to see if. My car was rreaffirmed? Also, if it was not and I return mg vehicle does it affect my credit?
Robert Weed
Bianca:
Well it’s confusing for you, so your lawyer should be able to tell you if you reaffirmed the car. You would have had to sign another piece of paper. And if you were my customer, you’d have had to listen to me try to talk you out of it.
It’s in the records of your court case. somebody in your lawyers office can look it up in 90 seconds.
D
Hi,
My bankruptcy was discharged in 2009. I did not reaffirm my mortgage, after the bankruptcy the account was transferred/bought by Greentree. I was paying on time and after a hardship and being denied modification the house foreclosed in 2012. I checked my credit and Greentree reports the account as “included in bankruptcy but the first late payment was 09/2011 which is actually extending the period this stays on my credit (all three credit bureaus have a “possible future removal date” further than all my other accounts that were included in bankruptcy). I live in Illinois, is this possible? If it was included in a bankruptcy shouldn’t they not report the information of payments after bankruptcy? Is this an attempt to collect a debt? Since it was included in bankruptcy wouldn’t they go by the discharge date and not date of the first missed payment?
Robert Weed
D:
I agree with you–you have explained exactly what Greentree’s report is NOT accurate. You might want to do a dispute yourself with the CREDIT BUREAUS, not Greentree directly. If that doesn’t work, you need a credit report lawyer in your state. One place to look is NACA. http://naca.net/
K
My husband filed Chapter 7 bankruptcy in 2012. He did not reaffirm his car loan as the creditor refused the request anyway and refused a loan modification. He has been making payments on the auto loan and always on time before, during and after the discharge. He recently was let go from his job due to lack of work and cannot make the payments anymore and not to mention owes way more than the value of the car. All three credit agencies show the account closed, “included in bankruptcy” with a 0 balance, but shows the payments he has made. Can you please clarify the following: Question 1: Are they allowed to show the payments on the credit reports if he did not reaffirm the loan after the discharge? Question 2: If he stops payment now and lets the lender take the car back, will it have any more negative impact on his credit? Question 3: will the lender be able to go after him or will he be responsible for the negative equity on taxes? Question 4: how will it impact him being able to go get another less expense vehicle? I know I have asked a lot, but I greatly appreciate your time and assistance.
Robert Weed
K:
Good questions.
1. No
2. No–at least if the creditor and the credit bureaus follow the law
3. No
4. Not
K
Thank you!!
Elaine
We were discharged from Chapter 7 in 8/12. We did not reaffirm our mortgage but have remained current. We were notified yesterday that Chase has sold our mortgage. Can the new mortgage holder change our loan terms since we didn’t reaffirm or are they required to hold the same terms? We are easily able to make our mortgage and have no intention of walking away.
Robert Weed
Elaine:
From what you said, I can’t see anything that would give them the right to change the terms of the loan.
Joana
I have done a chapter 7, and I was discharged 2 years ago. I continued to pay for my house (mortgage), and now I’m not able to pay anymore. If I stop paying and walk away, they will do a foreclosure. Will this foreclosure be reported on my credit score, even though the house has been part of the BK. Also, the bank still has me listed as owner in the county tax, is that normal. State is CA.
Thank you.
Robert Weed
Joana:
Credit reporting–your credit report should show “included in bankruptcy” and nothing after that, whether you keep paying or not. You should look at your credit reports now and see if that’s what they are actually doing–but that’s what they should do. Go to annualcreditreport.com.
Owner in the county tax–Right! You ARE still owner. You are owner until they actually foreclose. If you stop paying they will foreclose, months, maybe many months (I know nothing about California foreclosures, I’m a lawyer in Virginia) after you stop.
kim prosperi
I was discharged in 2011 from a bankruptcy I filled in 2010 in which I included my home mortgage. The original mortgage lender sold my loan to another lender and that lender sold it to another. I just tried to get a FHA loan, but was denied because the third lender who purchased the discharged mortgage reported me late this year 3x. I thought that a discharged loan involved in a bankruptcy could not be reported late even if it was. Is this correct? If so what can I do about it? Now FHA is asking for 12 months of canceled checks to discover payment history and timeliness. I thought I was not obligated to even pay the mortgage, if this is true why is it lawful for FHA to ask me to proveI’ve paid on time to a loan that was discharged? Can FHA do this legally?Can the mortgage broker ask for this?
Robert Weed
Kim:
There are two separate issues here.
First is your credit report. And you are right–the third lender is NOT allowed to report you as late after bankruptcy. You need to get your credit file disclosures https://robertweed.com/2013/08/20/the-credit-report-you-need-is-the-credit-file-disclosure/, find out which credit bureau this is showing on (maybe all three) and do disputes. If the disputes don’t fix it, you need to find a lawyer in your area to sue the credit bureaus, and also the lender. A good place to look for lawyers who do Fair Credit Reporting law is NACA. http://naca.net/find-attorney.
Your second problem is that you cannot get a new mortgage until the old house has been out of your name for several years. I explain what I know about that here. https://robertweed.com/2013/08/30/how-soon-after-bankruptcy-can-i-buy-a-house-again/. If the house is still in your name, you can’t get a new mortgage. Sorry.
(Oops now I’ve assumed you haven’t been paying…if you have been paying, you may be able to get a loan, but yes you do have to show that you have been paying.) Regardless of the bankruptcy a new lender wants to know one of two things–either that you have been paying on time, or that you don’t own the house any more and haven’t for a while. They cannot see that on your credit report, because of the bankruptcy. But they still want to know.
J Krieg
Our BK was discharged in 2010, State of Arizona. We did not reaffirm our mortgage but completed a Ch 7 Individual Debtor’s Statement of Intention. It said we would retain and pay pursuant to contract. Does the lender have to show we are making these payments? Checked our Experian report and this is not being done. If the lender doesn’t have to show our payments, then why are we doing this????? Thanks!
Robert Weed
J:
The reason you are paying is otherwise they foreclose your house and you have to live somewhere else. I know this is annoying. That’s why I have this blog.
J. Payne
I filed Chapter 7 bankruptcy in 2009 and it was discharged in 2009. My mortgage with BOA was included but I did NOT reaffirm it. BOA has recently sold my mortgage to Resurgent Mortgage Services. I paid my last payment to BOA on the 15th of January (Resurgent took over the account January 21st). Resurgent actually called my parents house 5 times today looking for me indicating that I was behind on my mortgage, which I am not. I am not sure why they called my parents house or how they got that phone # since I have not lived there in 15 years, but they did. I am curious if they are even allowed to call to collect from me since they were included in the BK with no reaffirmation? I feel like they can’t. Any help you can provide would be greatly appreciated.
Robert Weed
J.
I’ve never dealt with Resurgent Mortgage but I see that pattern fairly often. The new mortgage servicer forgets about the bankruptcy and starts calling. Usually they only call when you are actually behind. And calling your parents house rather than yours makes it extreme.
You are right! They can’t be calling you, much less your parents. That’s certainly a violation of the bankruptcy discharge, and maybe an FDCPA violation, too.
These people needs to be sanctioned. For your peace of mind. And to get them to shape up.
Your bankruptcy lawyer SHOULD be all over that. (I would be, as I explain here. https://robertweed.com/bankruptcy-five-year-warranty/. And here.https://robertweed.com/2013/02/16/after-bankruptcy-bills-calls-and-illegal-harassment/.) Start there.
J. Payne
Thank you so much! I thought that I was right. Have a good day and thanks for the quick response!
liz
my ex husband and I declared chapter 7 back in 2007 and it went through. he reaffirmed the house but no pymnts showed on our credit report. I left 2 yrs ago and he stopped paying and sold the house on a short sale in Nov. 2013. I qualified for a fha loan but the house showed up on the last credit report as going into BK in Nov. 2013. Do I have to wait 3 years to get a home loan now because he didn”t pay.
Robert Weed
Liz:
I’m not as lender. But I don’t think yo can get approved until three years after that house was out of your name. Actually, two years since it was a shortsale.
Now you’re saying, “he.” I’m assuming you were part owner of the house and on the mortgage. You don’t quite say that. You also didn’t say whether both of your reaffirmed or just him.
If both of you were on the mortgage, but only he reaffirmed, your credit report should show bankruptcy 2007, NOT 2013. But there still was a short sale in 2013 and as far as I know, you can’t get approved for a new mortgage until two years after the shortsale.
You can research more of that, here. https://robertweed.com/2013/08/30/how-soon-after-bankruptcy-can-i-buy-a-house-again/
Neil
I live in WV. My house was included in my Ch. 7. It is currently a rental property. I want to refinance it to get a lower interest rate and payment. The banks wont refinance a property that doesnt show my payments in the credit report. I sent all 3 agencies a copy of my payments history in hopes that would work, but it didnt. How can I refinance the property??
Robert Weed
Neil:
The way to prove payments is NOT from you–it’s from the creditor. You need to send a Request for Information under RESPA to the mortgage company and ask them for a payment history and status of the account for however long you need. Then try different lenders if the ones you’ve talked to won’t help you.
Neil
Is there anything specific I need to say in writing to the credit bureaus to get them to show my mortgage payments? I finally have proof of payments from my lender that I will be sending to them. I hope to refinance this property in WV.
Rosa
We live in FL and filed Chapter 7 in 2011. Our home was discharged and we never reaffirmed it. We have lived here 14 years and we have continued to make payments on time every month. We were wanting to move to a bigger home (4 bedroom) b/c we may have to have my mother live with us in the near future and our house can not accommodate her since we have children. My question is can we sell our home and look to purchase a new one or do we have to foreclose or short sale? Any advise would be helpful. Thank you!
Robert Weed
Rosa:
Has the value come up enough that you can sell it? If it has, then you can. If you are still owe more than its worth, then you’d need to try to get approved for a shortsale–and it may be impossible to get approved for a new mortgage until two years after the shortsale goes through.
Laura Hinkel
I just filed bankruptcy in nov. 2013. I have a first and second mortgage. I have never been late on my house or car payments and only filed a chapter 7 since my husband left me with all the credit card bills and I couldnt swing all payments. The house mortgages were included in bankruptcy which I didnt want. I just reaffirmed my first to a 20 yr mortgage with the same payment saving me 5 yrs on loan and 43k. I havent heard from the second at all but have been making payments. I would like to reaffirm with them also but my bankruptcy is not officially discharged until end of this month. My car payment has been reaffirmed also and still never late on any of these. Will any of these reaffirmed loans show on my credit as being paid? I am hoping after 2 years I can purchase another home. In order to do this do I need to reaffirm the second? I am not hurting to pay mortgages and only filed since credit cards were putting me in danger of being late on mortgages and car payment. I am in maryland….any advice the best route to get mortgages back on track again like they were? I do have equity in property and I plan to stay. thks Laura
Robert Weed
Laura:
Reaffirmed loans should show on your credit report as being paid. The only way to know if they are, is to check. I explain more about that, here. https://robertweed.com/2013/08/20/the-credit-report-you-need-is-the-credit-file-disclosure/.
You want to purchase a different home in two years. You should be able to do that if you can sell this one. Do you have equity? Do you think you’ll have equity in a couple years. If you can’t sell this house without getting a shortsale approved, then you won’t be able to buy until two more years after that. Under current regulations. Unless maybe you can rent this house for enough to make both the mortgage payments.
Keep in mind that I’m a lawyer, not a lender, so I’m just warning you that you may have a problem.
I’m real nervous about you wanting to reaffirm the second mortgage–I’d be really nervous that you did reaffirm the first. You are focused on your credit score. I’m worried in the future if you need or want to move, will you be able to sell this house. You didn’t give us any info on value of the house and what you owe on the mortgages, but that’s where my concern is.
What does your lawyer think?
Laura Hinkel
There is equity in the home and I would be able to cover both mortgages by renting. I was told that if I didn’t reaffirm the second or included it in my bankruptcy that I would still have to pay them later due to equity in the property. So I didn’t want to do that since down the road if I want to purchase another home, I didn’t want lender stating (well you still put your second lien holder in the bankruptcy so we can’t grant the loan). I was thinking if I reaffirmed both that it would give me a better opportunity to purchase sooner. I will need to move in 2 years to florida but would like to rent my current home in maryland and not sell so I have some sort of nest egg. I was real close to not being able to go bankrupt due to the equity but was able to by a hair. Should I pay on the second and can they still come after to me later if I dont? even if they are not reaffirmed? and will it make my chances of obtaining a new loan grim if I don’t reaffirm with them? I can make both payments but it would be nice just to have the first only but I don’t want to ruin my chances of purchasing again. I have never been late on either one and still current. Thank you for all your help. Laura
Robert Weed
Laura:
I can’t give you exact answers because I’m a lawyer not a lender.
I can say your credit will be a little better if you do reaffirm the second mortgage, too. whether that would make or break a loan in a few years I have no way of knowing.
I’m also nervous about how much equity you have, because if you had much, usually the chapter 7 trustee would have tried to sell it. (Is this a husband and wife, entireties situation; you haven’t said that.)
I can give you specific advice. Just general comments.
laura
Just myself on the house and loans. Equity is only 30k.
Robert Weed
Looks like you just slide through on the equity you are allowed to keep in Maryland.
Sonya King
I live in the state of Maryland and I filed a chapter 7 about two years ago. I fell behind on my mortgage and not the bank is starting foreclosure procedures. I don’t want to loose the house but the banks attorneys said I have to pay a reinstatement fee which is what I am behind on along with late fees and attorney fees. Since I am protected under chapter 7 do I have to pay all the fees in order to keep the house?
Robert Weed
Sonya:
Well it depends on the papers you signed with the mortgage company, but probably, yes. If you want to know for sure, you need to show the papers to a lawyer in Maryland.
RW
We bought a house in 2006 , this was an 80/20 loan. we filed bankruptcy in 2011, the bankruptcy was discharged in 2012 July. we wanted to save the house so we did a modification loan, and the loan was sold to another company,.. my husband and I are now divorced in 2013, I have not made a payment to the second mortgage in over a year. I’m on time making payments but I want to walk away from the house will I owe anything?
Robert Weed
RW:
Nope. I explain more here. https://robertweed.com/2010/03/25/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/.
And here. https://robertweed.com/2012/01/16/does-bankruptcy-still-protect-me-if-i-get-a-loan-modification/
And here. https://robertweed.com/2011/05/18/file-bankruptcy-stop-paying-dont-leave-that-house/
Debbie
I was told the same thing…..I filed Chapter 7 and did not reaffirm my home but still live in it and make payments. Our payments are not always on time and they DO NOT SHOW on our credit report. But, my question is, when I am ready to get a veterans home loan or any other home loan for that matter, are they going to ask me to get a statement from the lender of that home to see if the payments were on time seeing as we are still making payments on it?
Debbie
I also had one more question. Can I just wait the two years after ch.7 discharge date to obtain a new home loan. We did not reaffirm the house but still live here and make late payments. I was hoping to continue living here and make payments on this house and possibly rent it once we get another loan for a different home. Is this possible to get a home loan (in 2 yrs after ch. 7 discharge with no reaffirmation on this house and we still live here and make late payments? Do we have to do something like let them foreclose, or short sale, or other such processes if we eventually want to buy another house? We want to buy as soon as possible and we discharged Dec 2012. Is it possible to get a loan in 2 years without doing anything but keeping our credit report good? Does the 3 year waiting period apply and do we have to let it go to get the clock ticking?
Robert Weed
Debbie:
Good questions. But you are not going to like my answer.
No, you can’t just wait two years after the Chapter 7 discharge to obtain a new home loan. Under current regulations you can’t get approved for a new mortgage–unless you SELL the house you are in–until three years after a foreclosure or two years after a shortsale.
So, if two years after your discharge you can sell your house and pay off the mortgage, then you would be able to get a new mortgage on a new house. BUT–as you guessed–they would want to see your payment history. You have a right to get that from them under RESPA. If you can’t sell the house because there’s no equity, then you are looking at three years if you let it go to foreclosure, or two years after a shortsale. I try to explain that here. https://robertweed.com/2013/08/30/how-soon-after-bankruptcy-can-i-buy-a-house-again/.
Keep in mind that this may change–and I am a lawyer, not a lender. So you can apply at any time. This is just my best info on what you are likely to get.
Debbie
Suppose we do not want to sell the house before buying another and do not want to foreclose, do short sale, or do a deed in lieu; will our waiting time never begin as long as we are making payments and keeping the home? If this is so, then I need to do one of these options quickly so the clock will begin ticking. Thank you for your response. Your website is so helpful and we will certainly keep your information available in case we need an attorney.
Debbie
Ok. What if I reaffirm now after all this. Does it take 2 year from when we reaffirm?
Robert Weed
Deb: Looks to me like you’ve analysed it correctly. But again, you should talk to a lender in your area.
No, you can’t reaffirm after your bankruptcy case is closed, and I don’t think that would help with any of what I’ve said here, anyway.
Derrick
My chapter 7 in GA was discharged in Sept 2013. Due to medical issues, fell behind on my mortgage which was not reaffirmed and now bank is foreclosing. I can make the payments but can’t catch up fast enough for the bank and I also want to keep the home (without reaffirming it since we’re 50K underwater). If I file chapter 13 to stop the foreclosure, will that make me again liable for the loan or will it simply allow me to pay the arrears in a manner more conducive to my situation? While I really want to stop foreclosure, I don’t necessarily want to do so if it will saddle me with this entire debt. Thanks for your info and this great website.
Robert Weed
Derrick:
You can use Chapter 13 to catch up the mortgage even though you no longer have personal responsibility for the debt, because of the chapter 7. The Supremes decided that in a case called Johnson v. Home State Bank. http://www.law.cornell.edu/supct/html/90-693.ZS.html.
The Chapter 13 does NOT get you back on the hook for the discharged loan–later on if you decide you will never have any equity, you can drop out of Chapter 13, stop paying, and move out when they foreclose you. Still can’t come after you for anything they don’t get at the foreclosure sale.
Dina
Hello Mr. Weed,
I filed for Chapter 7 on Feb 28, 2012 and on 6/20/12 it was discharged. I did not reaffirmed my mortgage and as you previously stated and after also checking my three credit reports its showing as ” Included in bankruptcy”. My dilemma is that before my bankruptcy was discharged I had a loan modification going on with Bank of America, who ended up modifing my first loan and forgiving 60K from my main loan so currently instead of having a 188K loan I now have a 128K loan. This was all done before the discharge, but bank of america ended up selling the 2nd smaller loan that did not get modified of 45K to another lender who is now showing discharged in bankruptcy and will be deleted by 12/2016. After the bankruptcy got discharged Bank of America sold my 128K loan to Nationstart and this company is not reporting anything in my credit because obviously I did not reaffirm. My question is what happens to the smaller 45K loan since I got a modifficatin for the first one and got a principal reduction. If I walk away I know I dont have any obligation with neither bank but I know the consequenses of the foreclosure as far as getting the deed off my name and stuff. If I sell this house and now I have some equity, will the second mortgage come after their 45K even if they are showing discharged or can I assume I dont owe them anything and just move on. Or how can I get the 2nd loan to be deleted so I dont have any liability.
Also, my husband did a reaffirmation on his motorcycle after the bankruptcy was discharged. The company who is representing Kawasaki, Bass and Associates (Im guessing is a collection law firm or something like that) were the ones who sent us the paperwork and we signed them over. All payments are been sent and paid to them. After reviewing my husbands credit reports I see Kawasaki listed as discharged in bankruptcy in Equifax and in Experian it says transfer to another lender/discharged in bankrupcy. No where it shows Bass & Associate reporting the payments, which is good in a way because my husband has been paying a few months here and not paying for a few months…The bike loan was reaffirned at a lower amount of $4,500 which my husband still owes about $3,300. Bass & Associates don’t bother calling us to collect payments but every other month they’ll send their usual letter saying the minimum payment is $125 and to pay. My question for the bike situation is can I offer a offer to settle with a lump sum of less than the amount owed of $3,300 in order to have the bike paid off and get the title? For instance start at $2,300 and cap at 2,800 or since I reaffirm the debt I’m liable to pay everything.
Robert Weed
Dina:
Great questions. That second mortgage is still attached to your house. You can’t sell it without them agreeing or paying them in full. I explain more about that here. https://robertweed.com/2010/03/25/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/.
I don’t know exactly what you signed with Bass and Associates–and also don’t know what the laws in your state are and what kind of Kawasaki you have. You say get the title, so I’m assuming it’s a street bike with a title.
A reaffirmation signed after the bankrutpcy is over is not legally a “reaffirmation.” They cannot come after YOU if you don’t pay. They can pick up the bike. Would they settle for a smaller lump sum? I’d guess they would. But I don’t know what condition the bike is in–or what they would get if they sold it. Bass knows more about the bike than I do–they have the VIN number, probably and can look it up. But they don’t know what condition it’s in. You or your husband knows what a dealer would give you for it (if you had clear title.) That’s the most it would be worth to Bass–depends on how hard you want to bargain.
Erica
Hello Mr. Weed,
My chapter 7 bankruptcy was discharged in January 2012. I did not reaffirm my mortgage and is current on my payments. I’m looking to keep my house long term and have some equity built up. My question is if I refinance my mortgage with a new lender, will my payments then show on my credit report? Also how long after discharge before I can try to refinance?
Robert Weed
Erica:
Yes, if you refinance with a new company that would be an after bankruptcy loan and should show on your credit report. My guess is that you can’t get approved sooner than two years after the BK–but I’m a lawyer not a lender, so you can try to apply.
B
Hi Mr. Weed,
I have a question. I filed ch 7 with my 1st and 2nd. The bankruptcy paperwork states they were suppose to be reaffirmed but it does not appear that they were. I do not remember signing anything for the 1st..I know for a fact the 2nd was not. My 2nd decided to charge off the lien and now any payments received goes towards the principle balance. I live in AZ. If I decided to stop making payments on my 2nd can they the 2nd foreclose on me? The 1st is $130k and the 2nd $35k (fixed second).
Robert Weed
B:
You didn’t tell me what the house is worth. If the house is worth $100,000 the second is not likely to do anything; if it’s worth $350,000 then they’d foreclose. I explain more here. https://robertweed.com/2010/03/25/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/. Not paying the second calls for “nerves of steel.”
You need to look carefully at how long you expect to need that house; whether there will be any equity any time soon. A lot of people go that way but I never recommend it without a long and careful talk.
Yadira Arteaga
I filed bankruptcy 5 years ago and included a rental i had, the tenants continued to pay the mortgage non stop for this last 5 years. I would like to sell the house now that the equity has gone up but am not sure I can since I included it in my bankruptcy. Can I sell the property?
Robert Weed
Yadira:
Assuming it was a Chapter 7 bankruptcy, now that there’s equity you can sell. Same as if there had never been a bankruptcy.
Good luck!
Deb Kapitan
Hi, my chapter 7 bankruptcy was discharged April 2013. I did not reaffirm my home loan, nor do they report my current payment as of this date despite that I make on time payments regularly. In reading on the internet, if I have request proof of payments from my lender on paper and send them to the credit bureaus that they will update the payments I have made. Well I just got a letter back from Experian telling me that the results were as follows: You filed bankruptcy chapter 7 and lender shows a zero balance. Nothing is said about applying my proof of payments. It aggravates me that even with proof they won’t add the payments I have made, bankruptcy or not – they are getting money from me. If I dispute this is it going to do me any good or just cause me greater aggravation? I figured annually I would do this, but do I have any recourse? Appreciate any help you can give.
PS: I have a home equity loan (not reaffirmed either) and am also making those payments. They are reporting to one of the CRA’s. Can I request that the 2 other CRA’s update their records in accordance to the one?
Thank you
Robert Weed
Deb:
Nobody is required to report, and that’s your problem.
Legally of course bankruptcy zero is correct–because you don’t have to pay. Now it is also correct that you ARE paying, but I’m not sure that you can force them to add that info. Maybe.
I’m NOT a credit reporting specialist. You can find a lawyer in your state who is an expert on that area of the law, by going here. http://www.naca.net/
Eugene
what if you are doing a modification on your house after a bankruptcy is there some kind of form that you can get to show that you didn’t put your mortgage in your bankruptcy
Robert Weed
Eugene:
You did put it in the BK. But that does not block you from getting a loan mode. You just need to keep yelling at them, demand to talk to their supervisor, write your Congressman, complain to the Consumer Financial Protection Bureau.
Sadly this comes up a lot.
Mona
Hello Robert. This is going to be long and I apologize in advance but I do appreciate your time and help. My husband and I filed chapter 7 BK and it was discharged Aug of 2013. We have an 80/20 loan on our home with the same lender for both mortgages. The first mtg was modified with the H.A.M.P. and we have a 2% fixed rate for the life of the loan but they would not do anything to help us with the second mtg. We owe $155K on the first mtg and $20K on the second mtg. Our home is only worth about 90K right now, so we are really upside down but our monthly payment on the first is only $650 for PITI.
As of the date of filing the BK, our second mtg was almost 5 years behind but the loan servicer had always told us that as long as we paid the first mtg, they would never foreclose on us, but they said we would have to pay the second mtg off in full if we ever wanted to sell or get the title in the future. Right before we filed BK, our 1st mtg was on a rolling 90 day late and we were 3 months behind. The loan servicer had started foreclosure proceedings prior to the BK filing and then stopped it once we filed. We did NOT reaffirm our home in the BK and we managed to pay the 3 payments we were behind to bring our mtg current right before the discharge date. The foreclose was canceled and since our discharge, we have not missed a payment on the first mtg but we still have not paid anything on the second that is now almost 6 years late.
I am now fully disabled with MS and with just disability, I cannot afford the second mtg payment but I can afford the first. We want to stay in our home because the low payment is all we can afford and eventually we want to pay it off and own it. I am just really afraid that the loan servicer is going to foreclose on us in the future because of the second mtg we are not paying on, even though they said they would not do that, as long as we paid our first mtg. Do you think it would be a good idea to call the mtg co and try to work out a mod on the 2nd or at least ask if we could start fresh making payments on the 2nd mtg, without having to pay the arrears, or do you think that as long as we continue to pay the 1st mtg, they will likely not foreclose? I believe in letting sleeping dogs lie but I don’t want a surprise in the future either.
I want to just make it clear that the H.A.M.P modification took place a couple of years ago and was in place way before we filed BK.
Thank you for taking your valuable time to read this.
Robert Weed
Mona:
Excellent question–and you’ve obviously done your research.
I explain here what you call, “let sleeping dogs lie” and I call “nerves of steel.”https://robertweed.com/2010/03/25/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/.
Generally you want to save a little money and then offer them a cash settlement–but that doesn’t always work.
You could also, depending on whether you think it is worth it–come back with a chapter 13 and knock the second mortgage off the house permanently. I explain that here. http://robertweed-bankruptcy-and-second-mortgages.info/
I think offering a cash settlement, or going Chapter 13, is better than just starting to pay them again.
But, I know nothing about real estate values in your area, or how old you are, how easy or hard foreclosure laws are in your state–all those also factor into what you should do.
After you understand all your choices, picking the best one is a short in the dark.
Mona
Thank you, Robert. I am 45 and I live in Phoenix, AZ. Our home is currently worth approximately $130K (on a good day) and we owe $156K on the 1st and $25K on the 2nd. I was speaking with my husband about possibly doing a settlement offer and he agrees it would be best if we could get it done. That way, our first would only be $25K upside down and within 5-10 years, we could hopefully break even. More than anything, we are able to afford the first mortgage payment of $640 due to the modification we received years ago and if we settle on the 2nd, we don’t have to worry about foreclosure due to the defaulted 2nd if it is considered paid in full through a settlement.
I will be receiving the 2nd part of my disability back pay in Aug and it will probably be the ONLY time we will EVER have a lump sum of money to offer for a settlement on the 2nd mtg. We will be able to offer $2500, which is 10% of the balance on the 2nd. Do you think that is a feasible amount? Due to the fact that we have 20% in negative equity on the first and we are not personally liable for the 2nd because of the chapter 7, do you think they will be more inclined to accept that offer?
Is this something I can do on my own by contacting the mortgage lender and telling them we want to offer a settlement or do I need an attorney? I am hoping we can do it on our own, since the attorney’s fees will take away from the amount we are able to offer for the settlement.
Again Robert, I appreciate all of your advice. I try to educate myself on all aspects of this situation because I believe knowledge is power, but I don’t want to think I know too much and end up in a worse predicament than I am currently in.
Robert Weed
Mona:
You didn’t tell me when you stopped paying the second or when the bankruptcy was, which would give me a better guess as to what they might agree to.
But I really don’t know. I don’t have enough info to tell you more than that it’s a shot in the dark, but I’ve seen it work.
In terms of do you need a lawyer, I’ve never tried to do that work for my clients (and therefore I can’t charge for it) because I don’t think I know enough to be any help. If you run into a lawyer who says they do know how to do it, I’d be concerned about getting scammed. And I don’t know how to find a lawyer who brings some additional knowledge to the table but admits they don’t know much more than you do.
Good luck.
nicole
I just want to say thank you for clearing this up for me. I was wondering why my mortgage payments do not show on my credit report and this actually helps. I’m going through this exact thing right now. Declared bankruptcy 7 years ago..and now I cannot sell my house. This has eased some of my concerns. Thanks for putting this out there for everyone. God Bless
Robert Weed
Nicole:
Thanks for your kind words. Glad I could help.
jennifer lauren
I have a question, Mr. Weed, what happens to my house taxes if I need to leave my home? I declared bankruptcy 22 years ago, and like the above woman, I will have to leave my home soon. What happens regarding the taxes? Will I get a tax lien on my credit report if I do not pay them? I do not have an HOA – but I’m concerned about the state/city taxes.
Thanks for any help. If it helps, I live in NJ.
Robert Weed
Jennifer.
The very little I know is here. https://robertweed.com/2012/01/02/bankruptcy-and-real-estate-taxes-counties-are-desperate/.
I know very little about how this works in Virginia. I know less than that about how this works in NJ.
Myra Lynn
We live in Illinois and our Chapter 13 bankruptcy was discharged last year (2013). We pulled our credit report and found out that even though we didn’t make our payments on our mortgage through the courts and was told by our attorney that we had reaffirmed that in reality we didn’t. The bank is reporting that the loan was included in the bankruptcy and that it was foreclosed and they are “allowing” us to live here because we have always made our payments. We tried to refinance our mortgage and was informed that since it is reporting as a foreclosure then we cannot refinance or get a new home for at least 3 years after discharge. Is there any legal action that we can have toward the bank for reporting our credit inaccurate? Also if we did decide to walk away, how will that affect our credit now, will it be reported again at this newer date and then we have to deal with more bad credit?
Robert Weed
Myra:
That’s a really tricky question.
Were you catching up the mortgage through your Chapter 13. (Why were you in chapter 13?) If you were catching it up, then it is NOT discharged. And if it’s not discharged then now that you are out of chapter 13 and caught up, they should be reporting you as current.
If it was current going in, then it probably is discharged (some courts disagree with that.) Obviously knowing whether it is or isn’t discharged depends first on what you were doing and why you were in Chapter 13, and then seeing what judges in your area say. That’s just the first step.
Whether you can force the bank and the credit bureaus to report it right (whatever right is) is tricky, because Chapter 13 is so tricky. After you ask the credit bureaus several times to report it right (once you figure out what right is and if that’s what you want) if that doesn’t work you’d need to sue them You’d need to find a lawyer in your area who does Fair Credit Reporting law–and ideally knows something about bankruptcy, too. One place to look would be here. http://www.naca.net/.
I can easily imagine losing they case (of course you might just get what you want by suing them), if the judge decides that the right way is to hard to figure out.
One thing I can tell you. If you walk away (which is NOT safe if the debt was not discharged) your three year waiting period is not form the date of the bankruptcy; it’s from the date the house actually forecloses.
You really need a consultation with a lawyer in your area who can look at your papers, and who knows both bankrutpcy and Fair Credit Reporting. and even then, that person might not know the answers.
Gracie
BK ch. 7 was discharged in June,2012 (California). We continued to live in house and make payments on first and second mortgage. We did not reaffirm. We did not receive statements, but did make payments. We asked for statatements, this request was not honored. Recently we received a letter we were quite behind; it turns out a balloon interest rate had been added to the second. Well, a this point we may need to relocate anyway forour job and we were wondering what in the world we could do; our house s terribly in need of repairs and we would owe much more than it is worth (probably upside down by over $100,000). Our question is, if the company forecloses, are we in California liable for income tax fees now that it is 2014; or because it was a BK, does this still cover it even 2 years later. We do not have savings for an income tax large payment. We are really perplexed at the next step. Even if we were able to stay, we are not able to afford the balloon payments.
Robert Weed
Gracie:
The debt was discharged in the 2012 bankrutpcy–and there’s no debt foregivness tax in bankruptcy. https://robertweed.com/2010/02/03/bankruptcy-foreclosure-1099-a-and-1099-c/ It still protects you even if you kept paying for two years.
So they SHOULD not issue you at 1099-c when there’s a foreclosure. If they do, your tax guy has to show them it was included in the Chapter 7 bankruptcy. I’m not a tax guy but you can read my link.
Tracy
If I reaffirmed, but moved six years later and the FMV is higher than what I owe, but the market is still slow – would a Deed in Lieu be possible or would they most likely refuse and go after me for moneys? Again, the FMV exceeds what I owe – which is a good thing – unless it isn’t!!
Thanks!
Robert Weed
Tracy:
Don’t know how likely they are to agree to deed in lieu. You know more than I do about the market where you are and I don’t know your lender. Also whether they want to accept a deed in lieu depends on how easy or hard it is to foreclose in your state and I don’t know that either.
Sorry, I’m just not any help on your question.
This IS an example of why I tell people do NOT reaffirm the mortgage.
Nick
Mr Weed…
I had a Chapter 7 discharged February of 2013, stayed in my home and am trying to get an FHA loan for a new primary residence in February of 2015. I’ve been pre-approved by one new construction lender, however they want me to sell my home and not do a short sale. So much for that idea.
BoA did the first mortgage, the principle of which is more than the value of the home. Both are still paid, simply to stay in the home. They have also both been modified at different points. Both were shown included in the BK on my credit report, however now my first has totally disappeared from all three and my second only shows in two. I did not know this when I applied for the mortgage. Is this normal? How will it affect me when I try again (likely closer to February) to get an FHA loan through my credit union?
If I do a short-sale at some point, these are not reported as public record. My credit report couldn’t change the status of the mortgage, even if it was being reported as in the BK. How can I purchase without starting the clock all over again if I can afford two homes? Thank you.
Robert Weed
Nick:
Unless you can sell for full value, I don’t know of any way you can avoid starting the clock running again. Well, there’s one. For some lenders if you can show that it’s rented, with a signed lease, at a profit, some lenders will then put you into a new mortgage. Obviously you’d need to move out someplace for a short term while you got a tenant in there….I’ve been told, I don’t know if that’s true.
Nick
Thank you, Mr Weed. I guess I’m confused how it’ll all play out. A short sale is not public record, but it would also not change the status on the mortgage on my credit report.
The only way I can prove selling my house is seeing my name off the deed. How can a short-sale or a dead-even sale be proven if there is no change in my credit report or will an underwriter just wait three years by default just because?
Robert Weed
Nick:
For one thing, they can actually look at the land records, they can check with the lender; and they expect you to tell them the truth on your loan application.
Nick
I’m sorry, I’m just worried I won’t be able to prove my case when the time comes. Not that I’m upset about not reaffirming my mortgage (far from it), I just want to be able to show the path without any issues.
Teresa
I just finished a chapter 13 and am waiting for my discharge papers. How long do I have to wait to apply for a fha loan. some places say I must wait 2 years, but others say I can do it right away. I live in GA if that makes any difference. thanks
Robert Weed
Teresa:
If some people say it’s right away, apply there. Let me know if that works, and I’ll pass it on to others.
Teresa
I haven’t actually spoken to any lenders, this is what I have read on the internet. Some writers say 2 years, other writers say right away. What is your take on FHA rules?
Robert Weed
Teresa:
Just had a client in his fourth year of a Chapter 13, who has gotten approved for a mortgage at 4.25% while still in Chapter 13.
Teresa
Thanks that’s encouraging!
Pete
Our bankruptcy, Ch. 7 in Wisconsin, was finalized about a year ago. We did not reaffirm the home because we wanted to stay. Things have changed and we’d like to leave. We wanted to sell the house but the real estate agent came back with a market analysis below the remaining balance on the principle. I called the lender and they immediately told us we could initiate a short sale.
I’m not real clear on the pro’s and cons of doing a short sale as opposed to simply walking away from the home. We would rather short sale for the sake of our own sense of obligation, but if there is a huge downside to doing the short sale I’d like to be aware of it. Also, would there be complications if we were to miss payments or stop paying while in the process of trying to sell the house. We have a lot of medical expenses landing on us right now.
Thanks so much for any advice you can give.
Pete
To clarify, we did NOT reaffirm the mortgage. We were planning to because we planned to stay, but we never received any paperwork from the lender to do so.
Robert Weed
Pete:
Someone was really looking out for you when you didn’t get the papers to reaffirm your mortgage. I get comments every week or so form people who cannot understand why their lawyer didn’t want them to reaffirm the mortgage. This is why.
Robert Weed
Pete:
Whether you want to short sale or just let them foreclose is a personal decision–it does not have any impact on your bankruptcy; and basically none on your credit or your ability to buy a house in the future.
Since you have a lot of medical expenses right now, from what you have told me, you probalby want to stop making the house payment and save money. You need as much money saved as you can, to take care of your medical expenses and so you have cash when you are forced to move.
I don’t have any idea at all how long it takes to get foreclosed in Wisconsin. I also don’t know how long it takes to get a short sale approved there, either. Based on what you told me about your medical expenses, you may want to follow the plan that lets you live for free for the longest time. (Sometimes on a short sale they will give you a few thousand dollars for your help selling it; sometimes with a foreclose, they will give you cash for keys. Those are factors, too, but I don’t know enough to tell you which is more likely.)
Pete
If we are pursuing short sale, our real estate agent has started marketing the house and the bank has told us to initiate the short sale process, will it cause complications with that process if we stop making payments? The agent seemed to think it would although she wasn’t specific. I’m thinking she’s had issues with people getting foreclosure proceedings started in the middle of trying to sell. But, the short sale is to prevent foreclosure, and is in the interests of the bank so my impression is that they would want to see that process through, rather than interrupting it with foreclosure proceedings. The mortgage company is Nationstar.
What we’d like to do is stop making payments once the house is listed as a short sale to save money for the move and medical bills. But we don’t want to throw a wrench into the short sale process either.
Robert Weed
Pete:
Your agent wants the longest possible time to get a shortsale approved.
You want the longest possible time to save money before you have to move. Those aren’t exactly the same.
Josh Krugen
I filed chapter 7 bankruptcy in April of 2008. Me and the wife wanted to stay in the home so we followed the direction of the bank in order to stay in the home. This was 6 years ago and my wife got sick in 2012 and passed. I am emberassed to say that I didn’t read the fine print and I am sure the bank will not be honest enuff to tell me if I truly reafirmed the loan or not? How do I know what was reafirmed and what wasn’t?
Robert Weed
Josh:
If you reaffirmed there was a paper that was filed at the court. Your lawyer can look and see if it was filed.
Stacy
We claimed bankruptcy just under 2 yrs ago. We are considering walking away from our home. I understand that any late payments aren’t reported to the bureaus but will a foreclosure further damage our credit? Will a foreclosure show up on our bureaus?
Robert Weed
Stacy:
Right, the foreclosure, like the after BK payments (and after BK non-payments) is not supposed to show on your credit report. You need of course to look at your credit report and make sure they are doing it right.
Kimberly
I filed chapter 7 in 2009 in indiana. I just recently found out my house was not reaffirmed like I had wanted at the time. My credit report shows a 0 balance. I have been 3 mths behind but kept payments up because Chase told me once I get to 4 mths a foreclosure would be activated. My taxes are current so how will a foreclosure affect me? My house has a balance higher than what its worth so is a short sale a good option?
Robert Weed
Kimberly:
You are one more person who should be really GLAD you did not reaffirm. If you reaffirmed you would NEED to get a shortsale approved–and if you could not get it approved, they could foreclose you and then garnish you for what they didn’t get at the foreclosure sale.
And if you got the shortsale approved, you would have to rent for at least two years before you could buy again.
Because you did NOT reaffirm a foreclosure does NOT affect you.
Since it’s more than three years since the bankruptcy, if you have built back your credit, you can apply now for a mortgage and buy a new place NOW. (You maybe have to talk to a couple lenders because the regulation allowing you to buy again without waiting three years after the foreclosure are real new.) https://robertweed.com/2014/08/26/soon-bankruptcy-can-get-mortgage/
See why reaffirming would have been a terrible idea?
Kimberly
Thank you so much for the info! One more thing, my father cosigned and was never on the deed of the house only my name. How do I handle this situation? Does this mean they can foreclose against him only?
Robert Weed
Kimberly:
Well, if dad cosigned then you DO need to get a shortsale approved, or they will come after dad. AT THAT POINT you need to talk to a lawyer there in Indiana about whether Indiana is a non-recourse state. Some states first mortgages CAN’T come after people; I don’t know if Indiana is one of those. Now that you told me dad co-signed the house, that really matters.
Kimberly
I have talk to my mortgage company and they said my dad was on my bankruptcy for the house? Not sure how that happen but they said he’s no more responsible than I am. I recently did a modification and I am eligible for a repayment plan or short sale. Only concern I have now is I don’t want an active foreclosure if I cant make the larger payments. And knowing these payments are doing nothing for me now.
Robert Weed
Kimberly:
Well they are wrong but it helps your dad that they think so.
Stacy
If I continue to make a House payment on a house not reaffirmed after Chapter 7 and I make the payment late can the Lender still charge a late fee?
Robert Weed
Stacy:
As far as I know, yes.
Stacy
My mother is a Co-signer on a house which was included in bankruptcy she was not involved in the bankruptcy however her credit is being affected. The house is still occupied by the debtor and the payments continue to be made on time although the payments are not reported to the credit bureau for the original debtor why would they not be reported as paid by the Co-debtor. Basically it seems when you apply for a loan the understanding is if the debtor fails to pay and the house is foreclosed or bankrupt then it will be up to the co-debtor to pay. Makes sense in that aspect, what doesn’t make sense is why the Co-debtor would also be negatively impacted when the Co-debtor has done nothing to avoid the payments or the responsibility of the debt. She has contacted the credit bureau and attempted a dispute as well as the Bank holding the loan and is only given a run around she has great credit and her own home she has had for 30+ years is there anything she can do ?
Robert Weed
Stacy:
She needs to find a lawyer in your area who does Fair Credit Reporting law. One place to look is here. http://www.naca.net/find-attorney.
When you say its affecting her credit, do you mean they have stopped reporting it at all? If they’ve just stopped reporting it at all, her credit is “affected” but NOT by very much. They should be reported, but there’s no requirement that the creditor report them.
So I don’t know if you will have much luck but you should talk to somebody who focuses on that area of the law.
Stacy
No sir, the creditor did stop reporting the payments on the debtor who filed the bankruptcy and is shown on their report as included in bankruptcy, which makes sense , But on mom’s report it is showing as seriously delinquent and is dated back until 2010 when the bankruptcy was discharged even though the payments have continued to be paid and on time. I contacted the bank yesterday and after being transferred 3 times I finally got someone on the line who would listen he advised me he would escalate the issue to his supervisor and with documentation to show how her credit is being affected could be resolved in another 6 months. This has been a true nightmare , we have tried everything from refinancing, loan modification, HAMP or HARP Program anything which would allow us to remove her from the loan and it’s been a constant dead end. I have gotten more information in one posting from you then I have gotten in a “gazillion” phone calls to the bank or the attorney who originally filed the bankruptcy and for that I am truly greatfull for your time and assistance. I will follow through with the link you provided and see what we can do. Thanks Again for your help!
Robert Weed
SDtacy:
Glad I was some help. good luck.
As you keep fighting, your right to dispute something on your/her credit report is with the credit bureaus much more than the creditor. so after you’ve argued with the banks, file a dispute with the credit bureaus–if they don’t fix it you can sue the credit bureaus and the bank.
A lawyer in your area who does credit report law will want to talk with you. https://robertweed.com/credit-report-dispute-line/
Paul Davidson
Great article. Thanks for the info, BTW, if anyone needs to fill out a form 1098, I found a blank form herehttp://goo.gl/zWpBY7. This site PDFfiller also has some tutorials on how to fill it out and a few related forms that you might find useful.
Cindy
Hi Robert… I may just be the exception to the rule… we never reaffirmed, our BK shows up but our Mtg company is reporting our payments as current… should we be afraid? Our problem is this… we never reaffirmed and just kept volunteer paying because we thought it was the right thing to do….but because we were so under water, and still are…now 7 years later…we still apparently ‘own’ the house because the deed still shows that and we are unable to purchase another house. The crime rate in this area and foreclosures are appalling and we just want to walk away but according to the banks we have spoken to we cannot… they said we could do the ‘cash for keys’ but because the title search would not match the 2007 date of discharge it would be a red flag… anyway…just wanted you to know, ours still shows we are ‘current’…. doesn’t seem to help or matter in our case…
Robert Weed
Cindy:
They obviously have you coded wrong, which is why they are giving you bad advice.
You want to do disputes with the credit bureaus, to get the mortgage showing bankrutpcy with the correct date.
And take a look at this. https://robertweed.com/2014/08/26/soon-bankruptcy-can-get-mortgage/. with the Fannie Mae July regulation, you should be able to qualify for a new mortgage. I’m seeing people are having trouble with interpretations of that mortgage, so you will need to shop. And you might want to save your credit reports that show everything has been paid on time, before you then do the disputes to have it show BK.
Anway, print out the Fannie Mae regulation, shop lenders in your area, taking that with you, maybe. Good luck. Let us know.
Cindy
Ok…Mr Weed… I just took an hour to read all these fabulous email strings…YOU are awesome!! I would like to ask you another question if that is ok…. We live in OH by the way, not sure if it matters or not…. but it has been over 7 yrs since we discharged our BK…so from some emails above I too have a couple of questions if I could bend your ear… We were sold to Fannie Mae… and when I tried to use HAMP to modify the loan we were told we make too much money…my Servicer of our Mtg will not call me back on loan modification… it is almost 25 k underwater and we just want out… if we stop paying now and let them come after us to forclose… will they now say we are “NOT” current on our payments? Will that hurt us? Should we do a short sale and walk away? We are getting older… close to retirement and need to be in a safer area and one floor.. with less maintenance… that is our hope and dream…have we messed things up by paying these last 7 years? If we stop paying now will we ‘pay for it later’? I sure would appreciate your wonderful advice…. We are not slackers by any means and have built our scores back up to the very good range, no debt…. we just hit a really bad patch from 2005 to 2007 but it doesn’t seem to mean much
Robert Weed
Cindy:
You credit report should not show late–but now it shouldn’t show current, either. So you’ll need to do some disputes to fix that. But I think you should shop for a mortgage first. If you are planning to leave Ohio, you want a national lender. Maybe Quicken loans.
Cindy
wow…you answered so fast!! Aren’t you just a little bit of fabulous!! I thought it would take a week to hear from you!! Thank you so much for the link…I will go there now…you are wonderful!!
Traci
HI. Thanks for the awesome post–good information! What can you do if the mortgage company is not reporting your on time payments but then reports a late payment? It seems a little unfair to do it that way.
Robert Weed
Traci:
Well, that’s an FCRA violation. At least it’s a violation if they dispute and they don’t fix it.
Here’s where I explain how to get your credit reports. https://robertweed.com/2013/08/20/the-credit-report-you-need-is-the-credit-file-disclosure/. And here’s how to do a dispute. https://robertweed.com/credit-report-dispute-line/.
If it doesn’t get fixed, you need to locate a Fair Credit Reporting Act lawyer. One place to look is here. http://www.consumeradvocates.org/find-attorney.
I should add that a FEW bankruptcy judges would punish that credit reporting as a bankruptcy violation. You should ask your lawyer if that might work with your judge. http://scholar.google.com/scholar_case?case=4642350585958960071&q=in+re+torres&hl=en&as_sdt=4,75,99,286,287,288,289
Mike
Hello Robert,
I live in CA and my wife and I had a BK discharged in Jan of 10. During that BK, we did not reaffirm our mortgage. We are trying to refinance the home (to lower the interest rate), and we are being told that our on time payments are not being reported to the credit agencies, and therefore our credit scores are negatively effected. Even though I did not reaffirm the loan, if I have made every payment on time since Jan of 10, do I have an avenue to force the bank to report this history? Also, this maybe a silly question, but I still own the home, correct? Upon selling the home, I would still receive the equity in the home? or, upon pay off of the loan, I would be transferred the deed? Thank you for your time.
Robert Weed
Mike:
Yes you own the house. No, they are not required (and maybe not allowed) to report the payments on your credit. And yes your score would be a little better if the payments were reported.
If you send them a RESPA request, and ask for your payment history, they would have to send it to you. You could show that to a lender. But if you want it on your credit report, like a say on this blog, no luck.
tom franklin
Hello Robert,
i did my bankruptcy jan last year. i included my home in the bankruptcy and stayed in the property mortgage free. one year later, april 2015, i was served with the lis pendis. i dont know how long the foreclosure process will take here in miami florida. in the last year, ive been repairing my credit, i have a credit card and am making payments. my question is, once the property is foreclosed, will this show up as a foreclosure in my credit and ruin my credit all over again, or will in be included or wiped out when the bankruptcy was filed. thanks for your answer.
can i put the property for sale if and when it covers the cost of all debt associated with the property? i believe the home is not underwater anymore, thus the lis pendis
Robert Weed
Tom:
People ask that quesiton all the time. your credit report should just show bankruptcy. It should NOT show the later foreclosure, so your work rebuilding your credit will adding up. Good work.
Yes you shoud be able to put it up for sale–either shortsale now, if the bank wants to work with you, or for a profit if the value keeps going up. But of course the balance that you owe goes up every month, too. And the bank is adding legal fees.
Lynn
Hello Mr. Weed,
We filed BK in 2008 in CA. We did not reaffirm the mortgage on our modular home. Have never been late on the payments. Our Mortgage has never showed up on our credit report. We realize that we are upside down on the home and the neighborhood is becoming more undesireable to live in due to crime. If we walked away from the home, would it show on our credit?
Robert Weed
Lynn:
No. At least not legally. It would be smart to check behind them just to be sure. But just like the payments don’t show, not paying won’t show either.
(Do you have Greentree? Greentree is known for calling people and making illegal threats, so take good notes on what they say if they call you. You’ll want to sue them for violating the bankruptcy discharge.)
Lynn
The mortgage is not being held by a mortgage company. It is actually being held by the company who sold us the home. Not only is it not on the credit report, but they never have sent us a 1098 in any tax year. Also, we pay space rent that is within $200 of being equal to the mortgage. How would this home affect us if we decide to file BK again next year? Can we even file again?
Robert Weed
Lynn:
Maybe I’m losing track. If you filed Chapter 7 bankruptcy in 2008 and you had this home then, you don’t NEED to file bankrutpcy again. You can just move out and walk away.
(Is this a mobile home? Do you rent the lot? You do need to worry about the lot rent as long as you own the place?)
Each question leads to another one. That’s why you really need to talk to a lawyer in your area!
Lynn
Yes this is a mobile home on a rented lot. I just looked at my 2008 BK papers and for the home it states: Debtor will retain collateral and continue to make regular payments.
Does this mean it was not re-affirmed?
Robert Weed
Well, you could have changed your mind and reaffirmed it after you sent in that paper. Have you asked your own bankruptcy lawyer to check what you did. I can’t tell you what your papers mean when I don’t have them and wasn’t involved.
Like I said, you do need to make sure the lot rent gets paid as long as you are the owner…that can be many months after you move out, if you move out.
just curious
i just had my chapter 7 bankruptcy discharged a few days ago , I signed a reaffirmation agreement for my car and home, i noticed that my home payment was not showing up on my on my credit report i called the bank and was told they received it in April but it was not filed , later was told it wasn’t filled out correctly was maybe the reason but they are looking into it and will contact me soon . i called my attorney they said that if their was a problem the bank should have contracted them and we will wait for their answer on the investigation they ( bank ) have opened . I am current on my loan , the payments are lower then i could rent for .i have a little equity in the home and i plan on continuing to make payments ( i have to live some where ) . my interest is under 4%. I am still unemployed but should be ok for the next year ( 401k) or until i find work . my questions are . should i reopen the bankruptcy and do the affirmation ? . i was worried that i couldn’t get a 2nd mortgage for a home improvement later but i am being told by loan officers that is not a problem ( only the bank where i have the loan said they couldn’t do a 2nd down the road because of the bankruptcy). can they raise my interest rate if i don’t do a reaffirmation ? can they foreclose if i keep making payments ? if i sign a reaffirmation again could they lower the principle ?what is the down side or upsides? i live in Iowa thank you
Robert Weed
Just:
I never recommend reaffirming mortgage loans. You are right that your credit score would be better if you reaffirm and it shows on your credit you are paying. But NONE of the other things you are worried about apply. You are still the owner, you need to still make the payments if you want to keep the house. Now, YES, I’d sign a reaffirmation if they agreed to lower the payments. At least around here, I’ve never seen it.
Anyway, most judges agree that once your case is discharged you can’t file a reaffirmation, so I don’t think it matters now.
just curious
MR Weed ,
Thank for your quick response to my questions and your answers have put me at ease, So in the future If i wanted to sell my home and purchase another one ( after the 3 year waiting period for federal loans for bk ) as long as i Qualify otherwise , my having NOT reaffirmed my loan will NOT be a problem ? (I have done some reading about ” Back to Work – Extenuating Circumstances” . ) also i recall asking my lawyer about Iowa Deficiency Judgments and he said IF i did a reaffirmation and was foreclosed on later i wont be responsible but it seems i would have been according to this http://www.nolo.com/legal-encyclopedia/deficiency-judgments-after-foreclosure-iowa.html ?
Robert Weed
Curious:
Both your lawyer and Nolo know more about Iowa law than I do. So I don’t know what to tell you since they don’t seem to agree. In VIRGINIA you’d be liable for a deficiency judgment if you reaffirmed the mortgage and later lost the house. That’s why I do NOT let people do it. I don’t know anything about Iowa.
just curious
thank you for your reply . so will i be able to sell / purchase a new home at the same time .if i otherwise qualify since i didn’t reaffirm after the three year waiting period for bk ?and will i be able to leave my home to my heirs in my estate , they would just be responsible for any remaining balance ?
Robert Weed
Curious:
Now it’s getting complicated. In a few years you are talking about buying again–ok–but keep paying on the old house just so you can leave it to your heirs when you die? Sounds like we’ve gotten into investment advice. I don’t know what your payment is, but it doesn’t make much sense to me.
Chris
Hi. I was discharged with Chapter 7 BK in January 2015. I did not reaffirm my car loan. I’m still making monthly (on time) payments, but the lender is no longer reporting my payment history on my credit reports. It currently show my car loan as “closed” and noted as “chapter 7 Bankruptcy, closed”.
Is it legal for the lender to report my account as closed although I’m still making payments and the terms have remained the same post-BK?
Thanks in advance.
Robert Weed
Chris:
Not only legal, it’s correct. Same as the house payments, as I explained here. Sorry.
Jon
Hi! I filed chapter 7 in May 2012 and discharged August 2012. I did not reaffirm my morgage. I now have over $100,000 in equity in my home which I have made regular payments on since BK. I plan to stay in this home several more years. My question is am I able to “buy my home back from myself” when I do qualify for a morgage? Thanks so much for your help.
Robert Weed
Jon:
Not sure what you are asking. If the loan you have is a good loan, no need to do anything. If you want to refinance at a better rate, the company you have the mortgage with can’t do it, but anybody else can.
Murial
I had to file bankruptcy because my husband decided to walk out and leave me with every bill. I have continued to pay my mortgage and can afford to pay it. I busted my butt working in order to do. I thank you for your explanation, but I want to get credit for paying for my home, instead of it showing up on my credit as a $250,000 write-off to bad debt.
Robert Weed
Murial:
You can see if your lawyer will have you reaffirm your mortgage, if the mortgage company will sign it, and if the judge will approve it. But I think that’s a BAD idea.
Jacqueline Strain
I wasnt aware of this. My mottgage company is telling me that its my attorneys responsibility to file a reaffirmation to the court. And since this was not done after bankruptcy discharge, it is too late and I cannot refinance my loan. This is 3 years after the discharge. They dont plan to ever release any information to the credit bureaus. My house notes were never behind before nor during the bankruptcy. What do I do about this?
Robert Weed
Jacqueline:
You can write your mortgage company with a Qualified Written Request asking for a payment history since your bankruptcy was filed. And show that to your new lender. Many mortgage companies would know to suggest that.
Dinorah Arias
Why is my mortgage bank still reporting to the credit bureaus after my discharged debt? I filed for chapter 11 in 2011 and discharged in 2015. I had the loans modified and now they are reporting again to the 2 credit bureaus.
Robert Weed
Dinorah:
Why? Because they messed up. Although if it was a Chapter 13 maybe they are supposed to. That’s a gray area.
Maria
Thank you, I am really worry and came across your comment.my ex gambled everything we had. Our house went in to foreclosed but I filed chapter 7 the house was included, I kept calling the bank to see if I had a chance to keep the house, I had no money and been alone with my teen girl .I didn’t know what else to do but right after the chapter 7 they actually accepted to work on a modified. It took me two years of back and for with wells fargo bank and finally I got the modification with a debt forgivesness for the rest of the balance as my house was upside down.it’s been .7 years never been late on my payment and finally.I got some equity on the house.my daugther is on her last year of college and this year I have been very sick no working as much over time and need money to help my daughter to graduate so I thought maybe we can use some of the equity do applied for a refinance to my surprise the new lender said that wellsfargo had placed a lean on my house for the whole old loan 275.000 . I am very confused and as sick as I am can’t do much now.I don’t understand why they didn’t disclosed that to me? And is this possible? is there anything I can do? Thank you
Robert Weed
Maria:
A lot of times the loan mod “forgiveness” includes a mortgage that just sits there. You don’t have to pay but it sits there until the property is sold. Now they certainly can’t do that without disclosing it to you. You need to take your mod papers to a lawyer to look them over.
Tiffany
Hi I was trying to get some information. Last year my husband and I filed for a chapter 13. To save our home from Foreclosure. The process of the chapter 13 took so long that we were able to do a modification on the loan instead and the bankruptcy was dismissed. During this time period we became in a much better financially situation over all but the dismissal of the bankruptcy is still on our credit reports and even though we are financially in a better place we can’t get credit. What should we do. Please advise. I feel like we are stuck
Robert Weed
Sorry, Tiffany. It will stay on your credit and so you’ll need to do several years of carefully rebuilding before you get back to good credit.
Herre’s more info. https://robertweed.com/after-bankruptcy-back-to-good-credit/ https://robertweed.com/2011/01/09/after-bankruptcy-getting-back-to-good-credit/