Question about homes and walking away

[readytofile]

We were discharged back in January and we did not sign a reaffirmation on the house or the heloc so technically they are discharged even though we continue to pay on them. So let's say that we decided we want to leave this house, move out of state and start over elsewhere. We know we can't sell this house for what we owed on it. How long do we have that we can just walk away from the house without any obligation? We actually were thinking of moving, but oldest daughter wants us to wait until she graduates high school(this time next year). Would be still be able to walk away a year later?

Any advice is appreciated

[coolmom04]

I'm pretty sure that you can walk away from it whenever you want... with no obligation.

Hopefully others will have input as well...

[readytofile]

I'm reading conflicting advice online so I figured I'd check in here. This forum was a life saver when I went through my bk Who knows...this time next year perhaps the house values will go up and I'll be able to sell it! LOL

[coolmom04]

I'm reading conflicting advice online so I figured I'd check in here. This forum was a life saver when I went through my bk Who knows...this time next year perhaps the house values will go up and I'll be able to sell it! LOL

Yeah... I can't imagine going through BK without this forum!!

I'm really confused about selling the home b/c I thought I read on the forum that you can't sell your home (if you did not reaffirm) unless you've paid off the note/mortgage and you have the deed, but this may not be correct. It doesn't make sense that you wouldn't be able to sell it... but I don't know. I haven't done much research about that.

[liz417]

Yes, you can walk away from the home because you are not liable for the loan anymore. I did not reaffirm on my home and "walking away" later is an option I'm considering if the home values do not turn around (I don't thing they will for a LONG time).

[justbroke]

I'm reading conflicting advice online so I figured I'd check in here.

What did the conflicting advice say? I'm just curious.

In any event, the debt is discharged. That means, it can't just come back and get you, at all. You can walk at anytime. That is to say, you can walk 1 day after discharge, or 1,000 days after discharge. It would not matter.

The lender would have no recourse except to foreclose on the property itself... known as an in rem action. The lender would not be able to come after you for any deficiency caused by the foreclosure. They would not even be able to report this to credit bureaus, although you may need to do some "cleanup" after the fact.

[MrBankruptcy]

The lender would have no recourse except to take the property back. Of course that would be a foreclosure added to your credit reporting on top of the bankruptcy. Your credit will be messed up anyways for 10 years and you'll have to start rebuilding it from now on.

[BCA2009]

The lender would have no recourse except to take the property back. Of course that would be a foreclosure added to your credit reporting on top of the bankruptcy. Your credit will be messed up anyways for 10 years and you'll have to start rebuilding it from now on.

The foreclosure should not show up on the credit report. The loan would show as discharged in BK, it can't also show foreclosed. From what I've read on here, it would show up in your local county records as foreclosed, but it would not effect your credit report.

Someone also asked if you could sell the home if you didn't re-affirm. Yes you can, as long as you sell it for enough to pay off the outstanding notes 100%.(first, second , third, etc).
Then anything in excess of that you would get to keep.

[coolmom04]

Someone also asked if you could sell the home if you didn't re-affirm. Yes you can, as long as you sell it for enough to pay off the outstanding notes 100%.(first, second , third, etc).
Then anything in excess of that you would get to keep.

Thank you

[blessed]

If you're serious about moving I'd find out the timeline for foreclosures in your area. If it takes a year for the bank to get rolling you might be able to stop paying now. Personally I'd play it really safe and pay longer than necessary before living rent free in the house.

GL!

[MrBankruptcy]

I'm not sure about their home loan being discharged, because if it was the lender would ask them to surrender their property. Many times if you continue to make payments through a bankruptcy they are not too concerned about getting a reaffirmation agreement because their security is the property. I know in a car loan, which is also secured loan, even if you don't sign an affirmation agreement to keep the car on a bankruptcy by keeping current on the payments if you default on the loan after the discharge of the bankruptcy you can be liable for any damage to their property or negative equities. You should check with your bankruptcy attorney to make sure you're not making more trouble for yourself.

[BCA2009]

I'm not sure about their home loan being discharged, because if it was the lender would ask them to surrender their property. Many times if you continue to make payments through a bankruptcy they are not too concerned about getting a reaffirmation agreement because their security is the property. I know in a car loan, which is also secured loan, even if you don't sign an affirmation agreement to keep the car on a bankruptcy by keeping current on the payments if you default on the loan after the discharge of the bankruptcy you can be liable for any damage to their property or negative equities. You should check with your bankruptcy attorney to make sure you're not making more trouble for yourself.

I'm not really sure what you are saying? But if you do not re-affirm the loan on your house, you are discharged of the debt regardless of whether you choose to keep making payments or not. If you do not re-affirm the bank can foreclose. But history shows that if you keep making payment the bank is glad for you to stay in the home.

Once you are discharged, you are no longer responsible for any debt related to the loan. I'm not sure what you mean by "negative equity".

Even if the home was damaged, it would be unlikely that you could be held responsible in any way. You would still have insurance on the property thru your escrow payments. Or the bank would put insurance on it itself.

I guess if you burned it down on purpose, the bank might be able to sue you, but I'm not even sure if they could do that.

[liz417]

I know in a car loan, which is also secured loan, even if you don't sign an affirmation agreement to keep the car on a bankruptcy by keeping current on the payments if you default on the loan after the discharge of the bankruptcy you can be liable for any damage to their property or negative equities.

I haven't heard of this....does anyone know if this is true?!??? How would they/you prove that the "damage" was done before or after discharge?? I was discharged last year and was planning on "turning in" my car, it has some bumper damage....HHHHHMMM.....

[readytofile]

What did the conflicting advice say? I'm just curious.

In any event, the debt is discharged. That means, it can't just come back and get you, at all. You can walk at anytime. That is to say, you can walk 1 day after discharge, or 1,000 days after discharge. It would not matter.

The lender would have no recourse except to foreclose on the property itself... known as an in rem action. The lender would not be able to come after you for any deficiency caused by the foreclosure. They would not even be able to report this to credit bureaus, although you may need to do some "cleanup" after the fact.

The conflicting advice is exactly what the people below are saying. Saying that the foreclosure would or wouldn't affect my score. At this point my score is over 600 and I'd like for it to go up, not down. If I can't walk away from it without it causing more damage then I would seriously rethink walking away. Even breaking even would be enough reason to fix it up and sell it if possible.

[justbroke]

The conflicting advice is exactly what the people below are saying. Saying that the foreclosure would or wouldn't affect my score.

A credit score is nothing to worry about. I was talking specifically about the respnosibility of paying the mortgage. You can have your credit report amended to show that the mortgage was IIB (included in bankruptcy), because the fact is, that's the correct status. Otherwise, they would have to remove the tradeline. All 3 of mine read "included in bankruptcy", even the one that was foreclosed.