Discharged and did Not reaffirm mortgage - conflicting information

[blueeyz]

I have heard different information on this topic and I am confused. Today I bought a vehicle and the finance guy at the car dealership was very concerned that I did not reaffirm my mortgage. He said that not only will the payments not get reported as good credit (which I already knew) but that I could not sell it because it was discharged in the chapter 7 bankruptcy AND he also said that when the market comes back and I gain equity in my house, my mortgage company can take my house even if I am current on payments.

My BK attorney told me that I would no longer be responsible for the house but I would still hold title to it and I could sell it like normal and I also I have read online from other attorneys this same thing. I have said the same thing as my attorney did.

Does anyone know what the truth is?

[keepmine]

The truth is, the F &I guy is an idiot.

[discombob1]

I would definitely believe your attorney over a car finance guy... honestly.

[discouraged]

If the guy knew anything he was talking about he would be working in a bank - not a car lot.

[blueeyz]

Thanks. But I work for attorneys and have for 14 years and believe me, some of them are NOT trustworthy.

Does anyone know for a fact that not reaffirming a mortgage after bankruptcy still allows you to sell the house as usual?

[daylate]

i believe it works like this. Debt is discharged (you don't owe it and don't have to pay) but bank still has a secure interest(lien) in it. Your name is still on title. You can sell but I believe you have to get the bank to release its secured interest. Which they will do when you pay off what ever remains on the debt that you don't have to pay but the bank is still owed and entitled to. Do some searches here-i think others have explained this. So essentially it works as if you hadn't filed-you can sell, but the bank has to get paid.

[blueeyz]

Thanks for that explanation. I just want to be certain if and when I sell my house and make a profit, I can keep the excess that is earned from the sale. If not, I would just stop paying, save up enough for a down before they kick me out and buy another house.

[BAR]

I researched this also on the forum here as I dont plan to reaffirm my home either.

I had read on the forum here that the situation is just like everyone has explained above.

You keep the house as long as you make the payments, and if you do miss a few payments your forclosure laws take effect that pertain to your state (I was told that they, the banks, have to abide by the forclosure laws in your state). Also you do get all the cash above the payoff when you sell the house, the bank does not take that and are only interested in getting ther money that is due to them that is all.
It is treated just like you didnt have a bankruptcy at all after discharge, it just doesnt get reported to the credit agencies. Actually BoA, I read will not do a reaffirmation for some reason, that reason, nobody can figure out.

Some of the others that are in the know will probably come and explain more.

[blueeyz]

Thank you for your detailed response. This is what I was told by my attorney and this is what I have read to be the case. I am disappointed that it will not report positively on my credit because obviously I need to rebuild my credit after the BK. But what's done is done.

[BAR]

From what I understand, your mortgage being reported on your credit report doesnt build your credit up as fast as we all think. From what I have heard is that a car loan or credit card builds the credit back faster than your mortgage getting reported.

I could be wrong there but from what I read there was some reference made to this.

[IBroke]

From what I understand, your mortgage being reported on your credit report doesnt build your credit up as fast as we all think. From what I have heard is that a car loan or credit card builds the credit back faster than your mortgage getting reported.

I could be wrong there but from what I read there was some reference made to this.

When it comes to re-building credit, a mortgage is no substitute for a CC-account (and vice versa). However, I would NEVER bound myself to a debt under an underwater mortgage by reaffirming just to rebuild credit.
Once you continue making your mortgage-payments and everything has settled, you can also ask the lender to report your payments ALTHOUGH you didn't reaffirm. That's possible as well - my auto-lender does the same.

If you get a few CC-accounts and a secured loan from a Credit Union or your bank (and maybe a car-loan at some point in the near future), you will be on the right path to rebuild your credit. With or without a mortgage.

[blueeyz]

Oh that's good to know. I did not realize that you can ask them to report the payments. Well, I already got the new car loan so that will start reporting after a little while and I plan to get one credit card and pay it off in full each month. So hopefully in 2 years my credit will look a lot better even without reaffirmation of the mortgage loan.

[BAR]

Thanks IBroke for the clarification. I definitely learned some thing new today! Thank you for that!

[IBroke]

You're welcome, folks!

When it comes to credit-reporting of non-reaffirmed loans, you have to think about it like that: Legally, credit reporting can be considered an "attempt to collect a debt" and without a reaffirmation, lenders whoo continue reporting are in violation of the permanent BK-injunction. HOWEVER, if YOU actaully ASK the lender in WRITING to continue reporting, a lender might do so because they are no legally "out of the woods". In case you would sue them for reporting, they would have your letter as valid defense. So further reporting is just an agreement between you and the lender. You have the right to request that the lender has to stop reporting - but if you both agree on it, there is no law making it impossible.

And yes, blueeyz, 2 years after filing (not after discharge), you will pass a magic mark where your credit-score is going to jump if you keep an establishing good credit. Many people believe that - once discharged - you shouldn't touch any credit any more. Although I accept that opinion, I share a different point of view. If you don't rebuild credit soon, you might regret one day. That is something that can't be fixed later on. And if you don't want to risk anything, rely on secured credit. That is 100% "safe". But don't waste time by doing nothing. Stay ahead of the game - you don't know what the future brings.

[blueeyz]

IBroke, I totally agree with you about not wasting time doing nothing. I need to be proactive in rebuilding my credit because I know it's not going to improve if I do not push it along. I hate to say it, but I honestly do not trust myself with credit cards so maybe getting a secured one is in my best interest because then I cannot abuse it. This is my second BK and I have vowed to never use and/or abuse credit cards again. Granted, the last time the credit cards were used for survival expenses due to significant other losing his job but still the thought of credit card debt scares the daylights out of me.