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Bankruptcy - My mortgage loan was not reaffirmed (chapter 7)

Denver, CO |

I file Bankruptcy and it was discharged like 2 years ago it was chapter 7. My mortgage loan was not reaffirmed but I have been making my payments on time ever since. Now, I want to move out of the state, can I just walk away from the house and still have the protection of the BK on the mortgage loan balance?. I have a FHA loan. Can I still buy on another state after this? i would like to buy right away...
Thank you,

Attorney Answers 5


As for mortgage, you don't personally owe money. If there are HOA issues or is there is personal liability for your property taxes, that may be different.

You can always buy if you can convince a lender to lend.

Under these circumstances, it would help you to make a call to a mortgage broker to determine your options. THis is a sticky spot.

Please contact me directly with document for a free 30 minute consultation to get more concrete advice. This is not legal advice. I don't have enough information to give actual legal advice. I can only take the limited information presented and provide a framework to know how your situation may turn out. I may have questions that bring up issues you did not think were important but make a big difference.

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If a debt was discharged in bankruptcy - not reaffirmed - the creditor is forever prohibited from collecting on that debt. Whether you can purchase another home, depends on your credit score, the lending institution and availability of money. These days, even people with very good credit are finding it difficult to obtain a home loan. Good luck!

I hope this helps.
Steven A. Leahy

Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.

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Purchasing depends on your credit score among other factors. Your personal liability for the mortgage was discharged if you didn't reaffirm. However, the property must still go through foreclosure if you default. You may want to speak with a real estate lawyer to see if a deed in lieu or a short sale can be accomplished. You won't be liable for mortgage payments but homeowners association dues or condo fees are your responsibility if there are any until the deed transfers in a foreclosure.

The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Illinois. Responses are answers to general legal questions and the receiver of such question should consult a local attorney for specific answers to questions.

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The better way to handle this is to apply for a new mortgage before damaging your credit by letting the old mortgage go into default.

Have you considered the possibility of a short sale of the property as a way to resolve this?

Hope this perspective helps!

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You can walk away from the house without owing any deficiency. However, the subsequent foreclosure will make it difficult to buy another home immediately. The new lender is not going to like to see that you simply walked away from the home. This is a situation where a short sale might look better to a potential lender.

You can reach Harkess & Salter LLC at (303) 531-5380 or Stephen Harkess is an attorney licensed in the state and federal courts of Colorado. This answer is for general information only and does not create an attorney client relationship between Stephen Harkess or Harkess & Salter LLC and any person. You should schedule a consultation with an attorney to discuss the specifics of your legal issues.

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