Foreclosure 5 yrs after Chapter 7 discharge

[IMsoConfused]

We filed chapter 7 in 2005. We have stayed in our house and have been making payments (never late for the 5 yrs.) The mortgages were never reaffirmed. We purchased a car last year (our credit score was 751 at the time). Right after that my husband got notice of cut in pay ( about $400 a month, plus the car payment difference). We have been struggling for a year now and aren't able to make another house payment. Plus the house won't make any money. I have several questions: 1) Our mortgage (1st and 2nd) that we have been paying the last 5 yrs. was listing in the chapter 7 and has been discharged. If we just stop making payments now, how does that effect us? 2) What should we expect and prepare for? When I called our lawyer, he said stay rent free for as long as we can (could be up to 10 mos.) Nothing else. He said they might try to tell us that we have to appear in court, but not to go, because we have already been through that. I'm so confused at what is going to happen from here. Lost in Colorado!

[iv65536]

Assuming you never refinanced, my understanding then would be that your personal liability for the mortgages has been discharged altogether. They can foreclose, but a deficiency claim is barred by the discharge.

[IMsoConfused]

I'm not sure if I understand what that means??? And, no, it was never refinanced, or reaffirmed.

So my next question would be: Is forclosure that only and/or best way to leave the house? I mean is that just the "other" part of the bankruptcy that we have not gone through with? When the bankruptcy was filed and our mortgage loans were involved.

[keepinitreal]

I'm not sure if I understand what that means??? And, no, it was never refinanced, or reaffirmed.

So my next question would be: Is forclosure that only and/or best way to leave the house? I mean is that just the "other" part of the bankruptcy that we have not gone through with? When the bankruptcy was filed and our mortgage loans were involved.

First, do you have any equity in your house? If so, could you sell it, pay off your 2 loans, and have any left over money?

If not, the best way to take care of yourselves may be to save up the money you're not paying to your mortgages now to pay for moving and paying for your next place. Eventually the bank will get the title of the house put into their name. Then you can leave and start over in a new home.

If you can't pay your house payments at all now, and you also have no money left over to save for moving to a new home, then you've got to really cut your expenses, including possibly returning the new car.

[IMsoConfused]

No equity. It would be lucky if it broke even (without agent fees)! I would love to not have the car, however, the only reason why we got a new (used) car for only $12,000. with low payments was because our other vehicle (1996) with 225,000 miles died. It's just a car to get us back and forth...Noting big or fancy at all. Payments aren't even very much for a car...just everything happen at once that made it a difference of about $700 a month. We really can't go on with the house payments and just need to down size or rent or something...But my concern is that we won't be able to find a place that will rent to us with a bankruptcy or foreclosure showing.

[angles]

I would not worry about finding a place. Lots and lots of people have bad credit these days and as long as you are up front about your situation it will go a long way. You will have better luck finding a rental through a private person then through a management company. Worse case they may ask for additional security deposit but that is about it.

You are not liable for the loan since it was discharged and you did not reaffirm or refinanced the house. Therefore no worries. Currently, in GA it will take about 10 months to foreclose give or take depending on the area and the bank. Use that time that you don’t pay the mortgage to save money and set your family up for success. You could extend the foreclosure time by talking to the bank and list the property for a short sale. But if you go that route, please be very careful so that you do not sign any contracts with the bank because there could be language in there making yourself responsible for the deficiency.

[ConfusedinOC]

If you do let the house go to foreclosure in this case would it be reported to the credit bureaus? Will this negtively impact your credit score? Would it have been better to let the house go right after being discharged?

[MrsDixon]

You can just stop making payments and live there until they foreclose. Although the foreclosure will be a public record it shouldn't show up on your credit report, only in the county records.

A BK and then a foreclosure on your CR would be being punished twice for the same "crime". If your house wasn't in foreclosure prior to your BK it shouldn't be reported now. Your personal liability for that loan was already discharged.

I'm about to go through the same thing and wanted to make sure that I wasn't going to have a FC added 2-3 years after the BK.

[GettingGoing]

Just remember that the foreclosure will probably keep you from obtaining a new mortgage (including FHA) for at least 3 years if not longer. If you can sell your house and break even its best to do so.