I had a mortgage that was included in a chapter 7 bankruptcy that was discharged in 2008. In 2011 the lender filed a judgement and the house did not foreclose until 2012. My credit lists a judgement against me as well as the bankruptcy. I am looking to buy a house soon but I am afraid that they will come after me for the judgement. What can I do to protect myself?
Your question is really two different issues (1) liability and (2) credit reporting. As I understand it (from Google searches), PA is a judicial foreclosure state. As such, it sounds like we are talking about a judgment for foreclosure.
In short, yes, the judgment for foreclosure can be reported in so far as it is a public record. However, you are not "liable" for any debt. Unfortunately, under current underwriting guidelines for FHA, you will need to wait 3 years from the foreclosure sale date before you can get another mortgage.
There is a special circumstances exception, but good look finding a lender or broker willing to invest the time in that red tape nightmare.
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Chapter 7 Bankruptcy Attorney
As long as you did not reaffirm the mortgage (or any second mortgage) and the debt was listed on your bankruptcy, you should be free any attempt by the lender to come after you for the deficiency balance. Your credit report will show the foreclosure under public records. The mortgage listing on your credit report should say the balance owed is zero and that the debt was discharged in bankruptcy.
My response to this question does not create an attorney-client relationship and does not consitute legal advice. The information is provided as a courtesy only. This format of written question and answer is too informal and lacks sufficient detail. It is almost never possible to give quality legal advice without a full set of facts and the opporutnity to have a dialog where questions are asked and answered. Moveover, posters on the internet should be aware that confidentiality is not guaranteed online. I am licensed to practice law in WI and IN.
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I am assuming the lender did not foreclose in 2008 because you continued to make payments, or started to make payments again after the discharge. Typically in PA, the lender is released from the automatic stay of the bankruptcy and proceeds with the foreclosure action within a few month of filing. Regardless, while you may have discharged the loan obligation, you did not discharge the lien of the mortgage. The lender obtained an in rem judgment (against the real property only) in the PA foreclosure action, which judgment contains a judgment amount that may or may not have been paid by the proceeds of the sheriff sale of the property. Even if there was a deficiency in the sale amount, you will not be liable for that. However, the judgment seems to appear on your credit statement legitimately and it will be difficult to obtain funding for a new home any time soon.
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I need to see the paperwork to advise you. The bankruptcy discharge, foreclosure paperwork and the credit report. If they did not report properly you may have a legal action. I have a Delaware county office if you would like to contact me.
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