forclosure after chapter 7 discharge

[redquartz]

Once your chapter 7 has been discharged, can a bank report to the credit bureau's that a piece of property was 'foreclosed'?

[justbroke]

No. The credit report should read 'Included In Bankruptcy' or "Chapter 7 Bankruptcy", but nothing else. It should also have a $0 balance on the trade line. However, if it was "foreclosed" prior to the Chapter 7 Bankruptcy, it may be accurately reported as "Foreclosure".

[tcreegan]

Hi redquartz,

Once your chapter 7 has been discharged, can a bank report to the credit bureau's that a piece of property was 'foreclosed'?

The credit bureaus report all kinda stuff, doesnt mean it is correct or can't be changed. Use letters, be persistent, check all three, they rarely agree

Tom in Colo

[IBroke]

Once your chapter 7 has been discharged, can a bank report to the credit bureau's that a piece of property was 'foreclosed'?

Just as justbroke said, think of your CH 7 filing-date (NOT your discharge-date) as some kind "time-cut" when it comes to accounts on the credit-report which are included in your BK. The filing "freezes" those accounts on your report. Everything occuring BEFORE the filing-date can be reported - everything AFTER it can't.

[dspii]

Just as justbroke said, think of your CH 7 filing-date (NOT your discharge-date) as some kind "time-cut" when it comes to accounts on the credit-report which are included in your BK. The filing "freezes" those accounts on your report. Everything occuring BEFORE the filing-date can be reported - everything AFTER it can't.

Soooo......my case was discharged and closed, I have continued to make my mortgage payments...ontime...no reaffirmation...my reports all show $0 balance...

I know that I am no longer liable for the debt of the mortgage...but what happens if I walk away? I understood that it will still show on my credit reports that the property was foreclosed on....is this correct? I thought that I researched this on the forum quite deeply and came to the conclusion, it will still show as a foreclosure on my credit report, although I would never be responsible for any shortage between the mortgage and the sale of the property.

[IBroke]

Soooo......my case was discharged and closed, I have continued to make my mortgage payments...ontime...no reaffirmation...my reports all show $0 balance...
I know that I am no longer liable for the debt of the mortgage...but what happens if I walk away? I understood that it will still show on my credit reports that the property was foreclosed on....is this correct?

NO, it won't show that it was foreclosed because the foreclosure would occure AFTER the filing-date ("time-cut"), so it can't be reported.

I thought that I researched this on the forum quite deeply and came to the conclusion, it will still show as a foreclosure on my credit report, although I would never be responsible for any shortage between the mortgage and the sale of the property.

Wrong conclusion.

Since you never reaffirmed, it doesn't matter at all what happens with your home and mortgage in the future. There will be no additional credit-reporting on that loan in the future. No indication of a possible foreclosure, no monthly reporting of payments, no nothing. The reporting won't even change if you win the lottery and pay the mortgage off next week. The last reporting was the one when you filed for BK and since you never reaffirmed, it's going to stay that way.

[redhunter]

NO, it won't show that it was foreclosed because the foreclosure would occure AFTER the filing-date ("time-cut"), so it can't be reported.

I agree that this is how it should be reported. However, I saw a case where the mortgage lender successfully argued that even though foreclosure occurred after filing and the property was surrendered in bankruptcy, foreclosure was necessary to claim title. In other words, it was not inaccurate to report that foreclosure was necessary to recover the secured property.

Partly for this reason and partly to avoid having my former neighbors have a vacant property next to them, I'm participating in a short-sell to avoid foreclosure. I'm not on the hook for home loan as it was discharged, but I've continued to list the property and we should be able to complete the sale shortly.

[dspii]

Sweet, I hope your right, what you say makes sense and I hope I was wrong, just don't tell anyone....especially the wife. (You know the saying, "I'm the man of the house...when she's not home!")

I may take a job out of state and there ain't no way I could sell the place and make any real money, after everyone get's their piece! Besides, it would likely be years before it would sell, market sucks here. As much as I would like to sell, pay off existing mortgage and happily move on.....if walking away has no penalty, that might be a great way out!

[tobee43]

I agree that this is how it should be reported. However, I saw a case where the mortgage lender successfully argued that even though foreclosure occurred after filing and the property was surrendered in bankruptcy, foreclosure was necessary to claim title. In other words, it was not inaccurate to report that foreclosure was necessary to recover the secured property.

Partly for this reason and partly to avoid having my former neighbors have a vacant property next to them, I'm participating in a short-sell to avoid foreclosure. I'm not on the hook for home loan as it was discharged, but I've continued to list the property and we should be able to complete the sale shortly.

i find this to be extremely interesting......

the bank argued that point successfully????...because there is an absolute flip of the coin in that legal argument providing there was an offer...or even if NOT...one must show attempt to the mitigation of damages.. (assoc with foreclosure fees, etc). a title only be clear for re-sale of the property....otherwise it can basically sit forever...

no need for foreclosing...simply a warranty deed and general release could have easily released the deed into the banks name and removed the previous owners. so i'm not clear on how the bank could have won that ...but nothing surprises me anymore!

[tobee43]

oh!! and presently we are in the situation where the foreclosure of our home was docketed in the court system prior to our bankruptcy discharge....however here it is two years later and still NO sheriff's sale, which in also one of the ways to have one's name removed off the deed.

the bank has not moved on anything...even tho we have done everything to get our names off the deed. now it's just a simple waiting game. the odd thing for our personal situation, is the mortgage had PMI....and as far as the process to recoup the funds on the federal level they must have a sheriff's sale...very odd indeed!

[dspii]

I will watch this thread closely for a while...please chime in with some real world scenario's regarding walking away from your discharged mortgage without the penalty of a foreclosure on your record.

[tobee43]

I will watch this thread closely for a while...please chime in with some real world scenario's regarding walking away from your discharged mortgage without the penalty of a foreclosure on your record.

ds.....thus far...at least i THINK i'm real (sometimes i do wonder)....however, the forclosure is NOT on our records....it was wiped out with the discharge of the mortgage....0 balance....under chapter 7.

since our situation is still so new, however, i cannot know for certain that in the "future" they will attempt to put it back on our report.

[IBroke]

I agree that this is how it should be reported. However, I saw a case where the mortgage lender successfully argued that even though foreclosure occurred after filing and the property was surrendered in bankruptcy, foreclosure was necessary to claim title.

That might be quite possible.

In other words, it was not inaccurate to report that foreclosure was necessary to recover the secured property.

It might not be inaccurate - but it's simply not allowed. Any kind of credit reporting on loans that were IIB and not reaffirmed must be stopped when the borrower files. Balance must be set to $0 and the account must read "included in bankruptcy". The lender's actions (required or not) after the BK filing-date mustn't have any influence on credit reporting. Let's say the borrower was always current prior to filing. How are they going to report that account? No missed payments, $0 balance, IIB AND foreclosure?

Let's say you have a car-loan and the lender argues that they have to "book" the surrendering during BK as "charge-off" or any other transaction, I highly doubt they could list that as well although it would be "accurate". And what about the CCs and personal loans?

[IBroke]

ds.....thus far...at least i THINK i'm real (sometimes i do wonder)....however, the forclosure is NOT on our records....it was wiped out with the discharge of the mortgage....0 balance....under chapter 7.

And THAT'S exactly how it's supposed to be.

[tobee43]

ibroke....i hope you don't mind i blogged your great reponse....because think i everyone that can should see it...so well worded...excellent information for ALL to share...as usual very much appreciated as well.

Ibroke:It might not be inaccurate - but it's simply not allowed. Any kind of credit reporting on loans that were IIB and not reaffirmed must be stopped when the borrower files. Balance must be set to $0 and the account must read "included in bankruptcy". The lender's actions (required or not) after the BK filing-date mustn't have any influence on credit reporting. Let's say the borrower was always current prior to filing. How are they going to report that account? No missed payments, $0 balance, IIB AND foreclosure?

Let's say you have a car-loan and the lender argues that they have to "book" the surrendering during BK as "charge-off" or any other transaction, I highly doubt they could list that as well although it would be "accurate". And what about the CCs and personal loans