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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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My house was discharged in a Chapter 7 bankruptcy over 3 years

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My house was discharged in a Chapter 7 bankruptcy over 3 years ago. I have continued to occupy the house and make payments. No re-affirmation agreements in place. I am seeking a new house now and a few of the lenders are demanding I sell the current house and threaten that if I let the house go back I can't get any loans because of foreclosure. Is this right? How can a discharged house be foreclosed on? I understand there is a debt then a lien but if the property goes back to the lender that should satisfy the lien, so why be required to sell it? If I sell the house but can only cover the first mortgage but not the second (80/20 loan) then what happens? Any idea what would show on my credit report which now shows the bankruptcy, if I let the house go back?
Hello,

Is this right? How can a discharged house be foreclosed on?
Although you had your personal liability discharged in the bankruptcy, the mortgage lender has a lien on the house. If you do not pay the mortgage, the lender can foreclose the lien and take the property. The lender cannot recover additional damages fromyou since your liability was discharged.

I understand there is a debt then a lien but if the property goes back to the lender that should satisfy the lien, so why be required to sell it?
It typically would not be required that you sell the house since you have no personal liability.

If I sell the house but can only cover the first mortgage but not the second (80/20 loan) then what happens?
You would need the lenders permission to do this since the sale would require both lenders to release the liens.

Any idea what would show on my credit report which now shows the bankruptcy, if I let the house go back?
Foreclosure
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