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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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We filed backruptcy 3 yrs.ago. We did not reaffirm our home

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We filed backruptcy 3 yrs.ago. We did not reaffirm our home morgage, but we stayed in the house and kept making our payments. The morgage company reported to the credit agenties that our loan was now settled by bank ruptcy and stopped reporting to all 3 credit agenties. My question is if times get hard and we can no longer make payments and they foreclose on our house, can they report that to the credit angenties or come after us in any way?? If they sell the house after foreclosing for less than what is left on loan, can the IRS come after us for taxes on difference??

Hi JACustomer,
1) If a house forecloses after the mortgage was included in a Bankruptcy - and not re-affirmed - the foreclosure cannot go on one's credit report - for the same reason that your post-mortgage payments have not gone on your credit report.
2) If the lender issues a 1099-C for the balance of the mortgage after the house is sold at foreclosure, you will not have to pay income tax on that amount. However, if you do receive a 1099-C, you will have to file IRS form 982 along with the 1099-C form to indicate why you do not have to pay tax on the 1099-C amount.

I think this is what you wanted to know. If not, please let me know.
Thank you!

Customer: replied 5 years ago.
This is really important....we were prequalified for a new loan in another state.......This is early June.....If hypothetically they do begin foreclosure on our house.....can the new loan officer find this information out in anyway at all...We hope to close by early September....The loan officer in Florida did approve us for a new loan up to 200K,....WITHOUT selling our house in VA. Is there anyway for the new loan officer to find this out? And how many months late do most mortgage companies go before begining foreclosure proceedings?

It would be against the law (contempt of court) for anyone at your mortgage company to disclose the fact that your mortgage is in foreclosure, or whether or not you are continuing to make the payments. The only information they are allowed to disclose is the fact that the mortgage was discharged in a Bankruptcy.

Of course, it is always possible that someone will violate this injunction against disclosing foreclosure information. If this happened, though, you would be able to sue the mortgage company.

Mortgage companies generally start the foreclosure process once the mortgagor has missed 3 mortgage payments. You can call your mortgage company to find out what their policy is.

Customer: replied 5 years ago.
The Obama loan modification was done 3 mo. after the bankruptcy was final. Does this change things?? We signed papers for the modification but the acct. # XXXXX changed.
Was the mortgage that was included in the Bankrutpcy the same one that you did the modification for?

Assuming the modification was done on the mortgage that was included in the Bankrutpcy - the fact that the mortgage was modified does not affect the fact that the mortgage company is not allowed to disclose anything about your mortgage other than the fact that it was included in a Bankruptcy.

In other words, the modification does not change anything.

Customer: replied 5 years ago.

Yes.....the wording in credit report was "included in Bankruptcy" So all reporting stopped....but we wanted to keep the house so we kept making payments all along...never late at all. Then we signed the loan modification right after the discharge in May 09...two years ago. I am just soooo afraid they will come after us cuz of loan modification.........There was a part in the loan mod papers where it referred to the bankruptcy and that we were not personally responsible for the loan, but I wrote in that we were going to keep the house and that we were going to keep making payments on it.....I am not sure if I should go to my real estate lawyer.....I would rather not have to...


My bankruptcy lawyer is very good and the wording in the first filing did NOT say reaffirmed....I questioned him on it and he said it protects us....which I am glad now it was not reaffirmed....but how does a loan modification affect any future legalities? My bankruptcy attny worded it...".will keep debt current". when we filed in 08. May 09 was the discharge and a few months later we modified the loan. So I guess the botXXXXX XXXXXne is....does bankruptcy trump a future loan mod? We really want to move to FLorida but are afraid of future IRS stuff....Thank you sooo much!...

A modification that occurs after a Bankruptcy does not make the mortgagor (you) liable for the mortgage. And the fact that you indicated you wanted to continue making the payments also does not make you liable for the mortgage.
The only thing that could have made you liable for the mortgage was re-affirmation, which must be done while the Bankrutpcy is in progress. It cannot be done after the Bankruptcy is discharged.
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