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Am I still personally liable for my mortgage after Chapter 7 discharge?

Tampa, FL |

Hello. I live in Florida. When I filed my bankruptcy petition my statement of intention said I wanted to reaffirm my mortgage. I changed my mind and stopped making payments before my case was closed. I never signed a reaffirmation agreement for the mortgage. I am afraid that I am now liable for the mortgage because I did not change my statement of intention to surrrender the house. Even though my first statement of intention said I was reaffirming, am I really still liable if I never signed a reaffirmation agreement for the mortgage? I'm scared I am on the hook now. Thank you!

Attorney Answers 3


No. Your personal liability on the loan was discharged in bankruptcy. The lender can foreclose on the property, and you will be named as a defendant in the foreclosure because you own the property. The court will determine the amount owed and enter a judgment that says if the amount isn't paid the property will be sold at a foreclosure sale; it is important that you make sure the state court is aware that you've received a chapter 7 discharge and that the judgment should not reserve jurisdiction for the court to later assess a deficiency balance against you.

If you have a homeowners association, fees or dues after the date your bankruptcy case are not discharged. You may have to pay the post-petition HOA dues, but the mortgage and property taxes are not your personal responsibility.

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Mortgages and other secured debts are confusing to people who file bankruptcy because there are two types of liability.

Bankruptcy removes the first type of liability, the personal liability. That is the right of the lender to personally sue you to collect on a debt.

But bankruptcy typically does not remove the second type of liability, which is the interest in the security (or collateral). The mortgage company continues to have the right to foreclose on the real property subject to a mortgage, just as a car loan company has the right to repo a vehicle it has title to. After all, Bankruptcy doesn't give you the right to a free house or a free car!

The statement of intention in Chapter 7 is like a dog with no teeth. It can bark, but it has no bite!

Hope this perspective helps!

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No you aren't, the Statement of Intention does not dictate what debts survive the bankruptcy. If no reaffirmation agreement was signed then it was not reaffirmed and it did not survivie the bankruptcy.

The lender would still have the lien against your home, and can foreclose. But you wouldn't be liable for any deficiency.

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