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Can I be held liable for a judgement filed against me for a mortgage that I previously had discharged in a chp 7 bankruptcy?

Glenside, PA |

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?

Attorney Answers 4

Posted

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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Posted

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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Posted

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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3 comments

Asker

Posted

My ex and I (not married) purchased the house in May 2007 as tenants in common. At the time, because my ex had poor credit, and I had good credit, they wrote up a mortgage in my name and deed in both of our names. I was a stay at home mom at the time (not working) they wrote a mortgage in my name using his income and my credit. When I showed up to closing, I did not want to buy the house, but the realtor told me that I would be sued and that she was a paralegal- so she wrote up an agreement that my ex would agree to refinance in 6 months. 6 months later, when I left that volatile relationship I found out that the agreement meant nothing and that it did not protect me. I moved out in Sept 2007. He stopped paying the mortgage in late 2007. I called Citi mortgage so many times that I have a whole drawer in my filing cabinet dedicated to them. My ex refused to sell the house and stayed there for 5 years with out paying the mortgage before they made him physically leave the house in 2012. Just to give you an example-I had to fax my lawyer authorization to Citi 27 times before they had a copy on their files for my lawyer to call them. One time I called them to ask for a quit claim deed, and their agent from their operations center in India asked me "what is a quit claim deed." Citi is by far the worst bank I have ever dealt with.

Robert John Carey

Robert John Carey

Posted

I am sorry you have had to go through this. And I hope there were good reasons besides the house to file the bankruptcy. I have a hard time believing the mortgage broker could have done this deal in the first place. Please feel free to contact me directly if you think there is anything I can do for you (I also am a Real Estate Broker).

Jacques H. Geisenberger Jr.

Jacques H. Geisenberger Jr.

Posted

I would suggest that you not communicate the underlying facts of your case on AVVO, a public forum, where the questions and responses are not subject to the attorney-client privilege concerning communications and my be used against you in the event there is any litigation involving the subject matter. I have added the category where you are going to receive a "better answer" to your questions. I am a licensed Pennsylvania Attorney with offices in Lancaster and Counties. If you found this comment helpful, be aware that it does not create an attorney/client relationship, is not protected by the attorney-client privilege, is for informational purposes only, and should not be relied upon without you first consulting an attorney who practices in the related area of the law and in the geographic area where you live or the dispute/matter is pending. Good Luck!

Posted

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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