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JoeLawyer
JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience:  Attorney in the practice of Bankruptcy Law since 1996
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I became disabled and had to file bankruptcy because I couldnt

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I became disabled and had to file bankruptcy because I couldn't work. I excluded the house and my truck with the intention of continuing to pay. I paid the truck off. But found the house was still too much due to added local utilities. I asked for help from the bank and was given the run around 4 times and each time told no. In the process I was also told to let the mortage slip a little more so I would qualify. Now it is so far behind there is no way to catch up and they are talking foreclosure.
My question 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?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 1 year ago.
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!

Good luck,
Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Funds I receive from JustAnswer.com are gratuities paid to me for taking the time to respond to questions, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. JoeLawyer is an attorney but does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) JoeLawyer. All rights reserved.
Customer: replied 1 year ago.

I did file a Chapter 7 with a schedule C- property claimed as exempt. The house was listed and I file the Chapter & Individual Debtor's Statement of Intention. It said I was retaining the house with the intent to reaffirm the debt. But no one showed up at the court from BOA to reaffirm the mortgage debt. And unfortunately my attorney is now a State Judge and unavailable to help. And I can't afford to pay a new one as my income is just SSDI.

I just received letters from BOA yesterday stating their intent to foreclose. So I'm kinda screwed. But I guess my question is still the same. Should I call them and tell them the house was in a chapter 7 with intent to reaffirm and that was never done. So I want them to take the house based on the Chapter 7 and that they never showed up to reaffirm at the hearing.Or just walk away and let them foreclose?

Expert:  JoeLawyer replied 1 year ago.
The bank is going to foreclose no matter what you do. Even if you had surrendered the property in the bankruptcy, the bank would still have foreclosed just to get your name off the deed and someone else's name on it. The only difference is, if you didn't file bankruptcy, the bank could come after you for the balance still owed after the foreclosure, whereas the bankruptcy will prevent the bank from ever coming after you on anything left over after the foreclosure AS LONG AS you didn't reaffirm the debt or do something after the bankruptcy to put yourself back on the hook (such as a refinance or modification or something).

So, the only issue is whether you actually reaffirmed the home. Indicating in the Statement of Intention that you were going to reaffirm the home has no legal effect; if a reaffirmation agreement is not signed and filed with the court timely, then a debt is not legally reaffirmed and thus is discharged. So, if you didn't sign a reaffirmation agreement and file it with the court during your bankruptcy, then it is likely that you will not owe the bank anything after they foreclose so you probably have nothing to worry about. But, if you signed some other documents after the bankruptcy (such as a refinance, modification, etc) then you may have put yourself back on the hot seat.

We can't give legal advice on this website, so you should consult with a bankruptcy attorney in your area. They can pull the bankruptcy docket and confirm whether or not you reaffirmed the loan. If the attorney determines you discharged the mortgage liability, then should be fine.

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Funds I receive from JustAnswer.com are gratuities paid to me for taking the time to respond to questions, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. JoeLawyer is an attorney but does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) JoeLawyer. All rights reserved.
JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience: Attorney in the practice of Bankruptcy Law since 1996
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