Hi flity, thanks for your question, which is: "Since I declared bankruptcy and the house was excluded as long as I continued to make payments. So can I not tell them that the house needs to be turned over due to not continuing to make payments and go back on the bankruptcy before they foreclose on the house?"
Answer: First of all, I'm sorry to hear you are having trouble keeping your mortgage paid. I am assuming you filed Chapter 7
bankruptcy, which means you did not
have monthly payments to the Bankruptcy Trustee
for 3 to 5 years. If my assumption is correct, then whether you will owe the bank on the house if they foreclose depends on whether you reaffirmed the debt during the Chapter 7 case. In other words, during a Chapter 7, the debtor in bankruptcy may reaffirm debts and continue to pay them, or may surrender the property and discharge the debt. However, sometimes a debtor keeps making payments on a loan without formally reaffirming the debt (which happens often with houses).
So, if you reaffirmed the debt, and the bank forecloses, then if the bank sells the home at a foreclosure sale and there is still a balance left owing, then you will owe this to the bank. However, if you did not reaffirm the debt (i.e. if you did not sign a reaffirmation
agreement during the bankruptcy case), then it is likely that even if the bank forecloses the home, you won't owe the bank anything since the debt you owed to the bank was discharged. You will need to contact your attorney to see if a reaffirmation agreement was filed in your case.
If it turns out that you did reaffirm the debt, then even if you end up owing the bank a deficiency balance after the foreclosure sale, they still may never come after you to collect it since you are disabled so it is possible that your income sources are exempt from garnishment
by creditors. Again, you will need to ask your lawyer if this is accurate for your situation.
If you want to stop the foreclosure, you may be able to file Chapter 13
and cure the arrears on the home, which forces the bank to cancel the foreclosure, but this requires you to keep future mortgage payments current plus make a payment for 36 to 60 months to a Bankruptcy Trustee which is sufficient to catch the mortgage arrears up plus cover other fees and costs, so it may not be affordable. Talk to your attorney about Chapter 13 if you think you can afford to keep the home.
Please let me know if I did not answer your question and I will be happy to elaborate!
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