If I file Chapter 7 and am in arrears can I....

[myhearts07]

Would a lender be willing to work with someone who has filed Chapter 7 and has no debt but is currently in foreclosure? I read on this site somewhere that lenders don't offer any options because of that especially with arrears.

Is that correct?

Hearts

[justbroke]

Would a lender be willing to work with someone who has filed Chapter 7 and has no debt but is currently in foreclosure? I read on this site somewhere that lenders don't offer any options because of that especially with arrears.

Short answer, no.

Long dragged out answer... it depends...

The problem with Chapter 7, is that the mortgage would be discharged, and you'd owe the lender nothing. The only way to circumvent this, would be to reaffirm the mortgage with a back-end deal to get the arrearages corrected or enter into a forbearance or modification.

It's a gamble. I would only proceed with the option just listed if

• you have a competent lawyer
• you have a lawyer who will do re-affirmations
• you are not under by more than 10%
• you have steady and stable income (and see no potential for any income reduction soon)
• you have really calculated the upside and downside to doing this
• you like to gamble

[myhearts07]

Thanks JB. So, should we even let our lender know that hubby is filing and see if there is something that they would be willing to work out concerning the house?

Hearts

[justbroke]

Thanks JB. So, should we even let our lender know that hubby is filing and see if there is something that they would be willing to work out concerning the house?

If you are really filing and not using it as a scare tactic... I don't see how it could hurt anything. I would just ask for a modification of somesort. If they pressure you as to why, just tell them flat out that you may need to file for bankruptcy and let it all go anyhow. The reason I'm so uneasy with my answer, is because lenders know that the majority of modified loans, end up in foreclosure again within 2 years.

I also wouldn't take what I say as gospel. When you play the bankruptcy card, you have to be prepared to play the whole hand.

Also, I noticed that you wrote that "hubby" is filing. Are you not filing jointly? Are you both on the note/mortgage?

[myhearts07]

No I am not filing. I am in the 8th year of my chapter 7, but it will not be officially 8 years until October this year. I don't want to file anyway. ONe of us has to have some type of decent credit. Just didn't want to do a BK and a foreclosure because my daughter is on this loan as well and her credit will be destroyed by the foreclosure and want to try everything within our power to save this house and her credit.

Hearts