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We filed for bankruptcy in October of 2009 and it was discharged in Jan. of 2010. We stayed in the house and kept paying (not realizing we had NOT reaffirmed) A year later our bank offered us a modification which we took. Then we went to go buy a ...
When you received your discharge in January of 2010 your mortgage was discharged because you did not reaffirm the debt. Because Washington has specific statutes that govern how lenders must foreclose, the lender doesn't simply get the house back after the bankruptcy discharge. You must be in default and the lender must follow some strict notice requirements to give you the opportunity to get caught up. So, to answer the question whether you are liable for the loan, the answer is only if you want to stay in the home. If you intend to leave the home or it becomes more of a burden than an asset, you can stop paying and eventually the lender can foreclose. You don't have to pay the lender a dime in that scenario.
If you intend to stay in the home, you should stay current with your modification payments. In a sense, this makes you 'liable.'
As far as the lender not reporting your on-time payments, it is common for lenders to do this. Remember, the debt is discharged so technically you don't have a personal obligation to pay the loan...I suppose that may be the logic behind why lenders don't report. They certainly aren't under any obligation to continue reporting your payment history.See question
The owner is upside down on the property because of the equity line
A Chapter 7 discharge elminates a debtor's personal responsibility to pay the debt but it does not extinguish the lien on the property. This generally means that if you want to keep the property, you need to pay on the loans to prevent the lenders from exercising their rights on the lien. A mortgage lender must follow Washington State law to foreclose on a property in our state. If the homeowner stays current on the loan despite having a chapter 7 discharge, a lender cannot foreclose. On the other hand, if the debtor becomes delinquent, a lender can begin the foreclosure process but it must still follow all the steps outlined in our State statutes.
If a borrower were to pay his first mortgage lender and not his second after receiving a discharge, the first mortgage lender cannot foreclose but the second mortgage lender could. However, the second mortgage lender has almost no incentive to do so because the first mortgage lien holder would get the proceeds from the sale until it was fully satisfied before the second mortgage lender would see a dime. Because of this, many second mortgage lenders are left with the right to enforce their lien but with no incentive to do so.
This can result in a situation where a debtor does in fact keep the home after getting a chapter 7 discharge and NOT paying his second mortgage lender. This 'strategy' comes with risks and I recommend you meet with a reputable bankruptcy attorney to discuss the pro's and con's.See question