I filed Ch. 7 bankruptcy last year. I did not file on my 1st home mortgage or my 2nd mortgage – home equity loan and chose to continue paying them. I never signed any reaffirmation statements after the bankruptcy. Recently my loan officer pulled my credit and saw that my reports show I have zero balances on both my mortgage loans mentioned above. She thought it strange and said she’d never seen that before since I have still been paying on both loans. I checked my discharge papers and found that the 2nd mortgage-home equity loan was discharged under the unsecured debt section. I called my bankruptcy attorney who was no help in answering if I have to continue paying the home equity loan so I called a real estate attorney and he told me to call my bankruptcy attorney and check with the county records to see who are lien holders on the property. Both the first mortgage lender and MERS are listed. I found that MERS was handling the mortgage for the bank that I have the loan for the home equity loan. I still want to keep the home and pay the first mortgage but am trying to find out if I have to continue paying for the home equity loan without going into foreclosure.
How do I find out if I have to continue to pay a home equity loan that shows was discharged as an unsecured debt in my Ch. 7 bankruptcy discharge papers, without going into foreclosure?
This is a common scenario after a chapter 7 bankruptcy.
It is quite common to not reaffirm mortgage debt. Many attorneys think it is malpractice to allow someone to reaffirm mortgages unless there was a very good modification involved.
So what happened is that you are in a retain and pay scenario. As long as you pay and stay current, the lender will not foreclose.
But at the same time, they do not have to report your payments on your credit. The proper reporting is $0 balance, discharged in bankruptcy.
There are still two valid liens, just no personal obligation to pay.
In the future, you can ask the lender for a payment history, or show canceled checks to a new lender.
I’m sorry that your bankruptcy attorney did not just tell you this information. You shouldn’t have been ignored just because your case is finished.
My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.
Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.
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