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My Mortgage Was Discharged in Bankruptcy But I’m Still Paying It. – Cliff

“Dear Steve,

I lost my job and we had to file bankruptcy in 2011. As of August we were discharged form everything including 1st and 2nd mortgage. Our 1st is 242000.00, 2nd is 43000.00. Our home value is below 200000.00. During the bankruptcy BOA transfered our loans to new lenders, the second went to greentree and is reporting correctly on our credit report as discharged in bankruptcy $0 balance. The first however with M & T mortgage is listed just like a new mortgage and shows late and BOA is reporting transferred loan and also discharged in bankruptcy. We have stopped paying the second as we know they don’t want to lose money but are paying on the first.

I want to know if the 1st mortgage can legally be reporting the way they are and what needs to be done to correct it, I have disputed with the credit bureaus and threatened the lender and they respond that the loan was transferred just after the discharge so they are not bound by the bankruptcy of BOA. Is this true? What do I do? Thanks


Dear Cliff,

Why are you paying on the first mortgage?

If the loan was discharged in bankruptcy you don’t owe the mortgage and paying it doesn’t get you anywhere unless you have some written agreement with the current mortgage holders.

To correct the credit report all you need to do is send a copy of your bankruptcy filing to the three major credit bureaus and dispute the listing.

I always suggest a consolidated credit report to make it easiest to spot errors and move ahead with disputes. All the dispute information will be with your consolidated credit report.

You can also confer with your bankruptcy attorney but they will probably tell you the same thing.

The problem now is that while the mortgage is discharged, the house may still be in your name with a now clouded title. You have no equity position in the property and without clearing the mortgage cloud liens you will remain on the hook for taxes, insurance, and utilities as long as the property is in your name.

READ  Our Mortgage Was Discharged in Bankruptcy But We Want to Stay. Will Wells Fargo Modify Our Loan? - Joseph

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • During the bankruptcy we did not re-affirm either mortgage.  The 2nd is reporting accurately and we are not paying it, but at this time we want to stay in the house and are paying on the first.  However they are reporting it like a new mortgage on our credit, I have a letter into them to correct this and yet they are saying they legally do not have to follow the bankruptcy because they acquired the mortgage after the discharge.

    My Lawyer is now involved and says if they do not fix the issues with our credit report he will be bringing a suit against them for violating the FCRA.

    • You are doing the right thing – I would look into an action for violating the FCRA, the bankruptcy discharge under 524(a)(2) of the Bankruptcy Code, and the FDCPA (although this is less likely to stick – depends on your jurisdiction).  I wish you the best.

    • While it appears you do have an FCRA issue worth pursuing, I’m still stuck on what your position is by remaining if the mortgage was discharged. Do you have any new agreement with the lien holders to remain and pay? And if so, how does that new agreement deal with the clouded title with the old liens against it?

  • Hi Cliff,

    In further response, I assume you are paying the first mortgage because you want to keep your home.  Unless you “reaffirmed” with your first mortgage during the pendency of your bankruptcy case, M&T should not be reporting as you describe regardless of the transfer.  M&T is bound to the documents and the bankruptcy just as BOA is.  I suggest you talk with your bankruptcy counsel regarding this and see if the debt was reaffirmed if you do not know readily.  

    Also, if you want to keep your home, you might want to talk about the second mortgage and what to do about it.  Unless the second mortgage’s lien was avoided during your bankruptcy case, the lien still exists and might cause you issues in the future.

    Good luck!

    Kim Coleman
    Philadelphia Bankruptcy Lawyer

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