Sorry, another foreclosure question

[scrapiron7]

My Chapter 7 was discharged in Dec 2007, and according to my lawyer, we did not reaffirm our home. I was then divorced in July 2008 and my ex-wife was granted the home in question. Unfortunately I am still on the home loan as the lender was unwilling to take me off, and the ex was unable to get solo financing.

I am now getting foreclosure letters from the lender saying the ex is a couple months behind, and according to her she can no longer keep up with the mortgage and plans to let it go. The letters I have received say that even though the loan was discharged in Ch 7 they'd like her to continue payment.

Can anyone confirm under these circumstances that I won't be held financially liable for her foreclosing on the house? I realize I will get a big black mark thanks to her, but I'd rather that then some huge debt.

Thanks.

[BassBoy]

If you and spouse filed jointly, neither of you will be responsible for the debt after foreclosure. The debt was never reaffirmed, therefore it has been discharged.

[wealth2009]

However, a BIG BK will show up on both (you and your spouse) consumer credit reports as a result of both filing a joint BK. Frankly, you did not have to make any further mortgage payments, after discharge of the BK. But, if your wife was solely on the title, but both of you were on the mortgage you both needed to either surrender the property or remain paying on the mortgage. Keep in mind the lender will continue to take your payments as long as you keep sending them and you are not in the arrearages.

Once you get behind the lender has the right to start foreclosure proceedings and you have no "automatic stay" protections. Since your wife was living in the home and did not make the payments in a timely manner the lender has the right to foreclose, even if their was a "reaffirmation" agreement. The reason being is the language in the reaffirmation agreement would have stated something like...."failure to make all timely mortgage payments to said lender will result in foreclosure proceedings....."

That's all...

[scrapiron7]

We did file Ch7 jointly and I know it's on my credit report. After the divorce I was still on the mortgage but only she was making payments since she was awarded the home and living there alone.

My concern was if I was going to have any financial responsibility for her failure to keep up with the mortgage.

Sounds like I won't owe any debt, just get a black mark on my credit.

Thanks.

[Trixie007]

I'm wondering how it will even show on your credit... if anything, shouldn't it be dated the same as your BK, since it was included? This is definitely more of a question than a statement - hopefully someone who knows more will respond!

[wealth2009]

Trixie007

Hi T, it sound like the house was not surrendered in the BK, but the spouse chose to continue making the mortgage payments. Again, if they were not in the arrearages on the mortgage at the time of filing, the lender would prefer not to take back the property. The lender just wants someone to make the mortgage payments, again the lender is not in the business of selling houses, but selling loans!!!

It does seems apparent their credit will be marked as a result of the BK, however, with the home being foreclosed on by the lender as stated shouldn't really make much difference to either spouse. BK will remain on their credit report for approximately 10 years. But, their mortgage will now show "foreclosure" on their credit report, because both are on the mortgage.

Shalom!!

[Trixie007]

Hi T, it sound like the house was not surrendered in the BK, but the spouse chose to continue making the mortgage payments.

True, they didn't surrender, but they also didn't reaffirm, so as this debt was discharged in the BK. I've since read elsewhere in this forum that if the foreclosure doesn't take place prior to the filing, and is included in the BK, then the foreclosure is just the lender going through the legal motions to take possession of the property for resale. I think it was HHM who said something like that, so it looks like any negative report on the OP's credit report should be IIB and not dated past the bankruptcy discharge.