If you filed Chapter 7 and did not reaffirm the mortgages you owed, your discharge includes the debt on the mortgages. Assuming that the mortgage companies did not file an action to contest your discharge (which is a rare event), your discharge includes the mortgage obligation. Obviously, the discharge does not eliminate the mortgage lien. Ninety days after you file bankruptcy, the automatic stay which protected your home expires. After the automatic stay expires, the mortgage company can file (or resume) the foreclosure action. But, any foreclosure would be "in rem" which is Latin for "against the land". In other words, the mortgage company can foreclose in order to clear the title to the property.
As long as you don't incurr post-bankruptcy attorney's fees by "fighting" the foreclosure, you're safe from any personal liability to the mortgage companies.
The 2005 revisions to the BK Code leave you liable for H.O.A. fees and any code violations until the date of the foreclosure sale.
Another consideration is your credit score. Although the judgment will not be against you "in personum" (i.e., against you personally so the mtg. co. could execute judgment or garnish your pay), it will be recorded as a public record.
I represent many consumers who discharged debts in bankruptcy yet continue to have problems with their credit reports or receive letters from creditors and debt collectors after their bankruptcy. Here is a new strategy that I suggest you try in order to combat a problem I'm observing :
If you consent to the foreclosure, you could try filing a simple response to the court and serve the mortgage servicers and their attorneys stating that you consent to the foreclousre "IN REM" but are reminding the Court, the Mortgage Companies and their Attorneys that any judgment against you shall be "IN REM" and NOT "In Personam" because you discharged the debts in Bankruptcy (attach a copy of your Bankruptcy Discharge Order to your response.)
In all likelihood, the Mortgage Company will file a Motion for Summary judgment rather than go to trial.
You should receive a copy of the proposed order granting Mtg. Co's Mtn For Summary Judgment. Read it.
The Proposed Order will probably not mention that the judgment is limited to "in rem" relief and that "in personum" relief shall not be had. File a response with the Court again attaching your BK Discharge Order and attend the hearing concerning the Mtn For Summary Judgment and explain to the Court that : (1) you discharged the debt; (2) you want the Court to mark up the Order to state that any judgment against you is "in rem" and "in personum" relief shall not be had. (If the BK Court entered an order granting Mtg. Companies relief from the automatic stay, this language is already in the BK Court's order but it's worth trying to see if the State Court hearing your foreclosure case will incorporate this language).
If the Court enters a typical foreclosure order, it will read like a monetary judgment against you for a very large sum. The credit reporting agencies will interpret this as a monetary judgment.
Also, the mortgage industry is one of the worst about continuing to report discharged mortgage accounts as still owing on credit reports. To obtain your annual free credit reports, go to www.annualcreditreport.com, use the phone numbers on their website, and ask them to MAIL your credit reports. (Pls. do not obtain them over the internet.) I am new to AVVO. After your credit reports arrive, you may contact my office and my staff or I will explain where to send your credit reports and I will review them without charge to you if you want me to.
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