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Roger
Roger, Attorney
Category: Bankruptcy Law
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We live in Denver, Co. My wife declared bankruptsy in in ...

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We live in Denver, Co. My wife declared bankruptsy in in the fall of 2005. It was finalized in Dec. of that same year. In the backrupsy she included her town home, but she did not reafirm it. She did remain in the town home and kept making the payment and has kept them up for the last 2yrs 8 months. If she were to walk away from the property would the mortgage company have any legal recourse to come back on her at this time. Thank you for your time. Bill C.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 5 years ago.

IF the mortgage was not specifically discharged during the bankruptcy, it is still a valid and collectible debt. It sounds like this is the case since she's continued payments on the note post discharge.

Thus, if she did stop making payments, the lender would have the right to foreclose on the property. If the foreclosure does not produce enough money to pay off the mortgage, the lender can also sue you for a deficinecy judgment (which are allowed in Colorado.

A deficiency judgment awards the lender the difference between what you owed on the loan and what the property sold for at the foreclosure.

Expert:  Roger replied 5 years ago.
Please let me know if you have any additional questions. If not, please clic "Accept" so I may receive credit for my time. Thanks.
Customer: replied 5 years ago.
Reply to Adam Kirk's Post: The town home was included in the dicharge of her bankruptsy. She just kept making the payments and did not reafirm it.
Expert:  Roger replied 5 years ago.

A reaffirmation is only for the benefit of the lender. It provides no protection or right to the debtor. IF she continued paying on the debt, she re-affirmed it and the lender accepted it without the security of a court order of reaffirmation.

The botXXXXX XXXXXne is that if she didn't lose the property, and the lender has accepted her payments, she still owns it and is liable for the debt on it. Thus, the lender has the right to foreclose as it would in any regular circumstance.

Expert:  Roger replied 5 years ago.

Let me clarify one thing. Because the debt was discharged, her personal liability to pay the mortgage obligation is gone, BUT her property is still subject to a lien in favor of the mortgage lender.

Her discharge serves to eliminate her personal obligation under the promissory note. However, it discharge does not eliminate the bank's security interest (or lien) against the real estate.

Because if the discharge, she would not be subject to a deficiency judgment.

Customer: replied 5 years ago.
Reply to Adam Kirk's Post: But if the mortgage was included and it was dicharge in Dec. 2005 would they have any recourse after this much time has gone by?
Expert:  Roger replied 5 years ago.

Let me clarify one thing - I mis-spoke about her personal liability. Because the debt was discharged, her personal liability to pay the mortgage obligation is gone, BUT her property is still subject to a lien in favor of the mortgage lender.

Her discharge serves to eliminate her personal obligation under the promissory note. However, it discharge does not eliminate the bank's security interest (or lien) against the real estate.

Because if the discharge, she would not be subject to a deficiency judgment.

If she's been paying on the mortgage, the statute of limitations has not tolled. The lender likely has 3 years from the date of the last payment to foreclose.

Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26093
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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