Mortgage Charge Off

[meghamann]

What is the name of your state (only U.S. law)? WI

I clamined bankruptcy in March of 2010. My mortgages were not included in my bankruptcy but now I am wondering if they were, not sure. When I bought my house it was an 80/20 so I have 2 mortgages. Well I pay both of them on time and one of them the 80, has on their statement that I am protected by my bankruptcy and that if I want to continue to pay my mortgage go ahead with the coupon. My other mortgage the 20% portion, I recently found out charged it off to an agency and when I called the agency she told me I am portected by my bankruptcy and don't have to pay. I have been paying my mortgage so I dont understand. If I stop paying can they foreclose? Do I have to technically pay the one that was charged off? It is just a charge off amount now, no interest or principal so it doesnt count towards when I file my taxes as the interst paid on a mortgage.

can someone help because i am not understanding what went on.

Thanks.

 

[justalayman]

have you asked your bk lawyer?

were the mortgage holders listed in your creditor matrix?

 

[LdiJ]

What is the name of your state (only U.S. law)? WI

I clamined bankruptcy in March of 2010. My mortgages were not included in my bankruptcy but now I am wondering if they were, not sure. When I bought my house it was an 80/20 so I have 2 mortgages. Well I pay both of them on time and one of them the 80, has on their statement that I am protected by my bankruptcy and that if I want to continue to pay my mortgage go ahead with the coupon. My other mortgage the 20% portion, I recently found out charged it off to an agency and when I called the agency she told me I am portected by my bankruptcy and don't have to pay. I have been paying my mortgage so I dont understand. If I stop paying can they foreclose? Do I have to technically pay the one that was charged off? It is just a charge off amount now, no interest or principal so it doesnt count towards when I file my taxes as the interst paid on a mortgage.

can someone help because i am not understanding what went on.

Thanks.

Yes, your mortgages were included in the bankruptcy. However, the house was collateral for the loans, therefore they can still foreclose if you do not pay the mortgage. The "charged off" one I am less sure about because I am not sure what your definition of "charged off" is. They should still have a lien against the property.

 

[larocque1]

What is the name of your state (only U.S. law)? WI

I clamined bankruptcy in March of 2010. My mortgages were not included in my bankruptcy but now I am wondering if they were, not sure. When I bought my house it was an 80/20 so I have 2 mortgages. Well I pay both of them on time and one of them the 80, has on their statement that I am protected by my bankruptcy and that if I want to continue to pay my mortgage go ahead with the coupon. My other mortgage the 20% portion, I recently found out charged it off to an agency and when I called the agency she told me I am portected by my bankruptcy and don't have to pay. I have been paying my mortgage so I dont understand. If I stop paying can they foreclose? Do I have to technically pay the one that was charged off? It is just a charge off amount now, no interest or principal so it doesnt count towards when I file my taxes as the interst paid on a mortgage.

can someone help because i am not understanding what went on.

Thanks.

What type of bankruptcy did you file; Chapter 7 or Chapter 13?

Here is a response based on what you provided:

If you did a Chapter 13, typically, a second mortgage would be washed away as part of the bankruptcy; meaning discharged. Your primary mortgage would have been legally reaffirmed (and you would be very aware of that), and you would be in a payment plan involving a Chapter 13 trustee this very day; Chapter 13 bankruptcy usually takes 3-5 years to pan out.

It sounds like you did a Chapter 7, so I would think you should be very aware if you wanted to keep your house or not. That being said, typically, in a Chapter 7, you discharge all your debt; both secured and unsecured. Your first and second mortgages would have been discharged in the Chapter 7 bankruptcy, as well as your unsecured debts (credit cards, etc.).

During your bankruptcy, you are allowed to still make payments on your debts if you want to; but why? You said you still continued to make/made mortgage payments through your bankruptcy and up to present day. I have to ask Why? It is none of my business, but why did you file bankruptcy in the first place?

Ok, here is your situation, based on the information you provided:

1. Your mortgages (first and second) were discharged in your bankruptcy
2. You continued to pay both mortgages during and post bankruptcy discharge.
3. You find out that the second mortgage charged off your debt.
4. You are still paying on your mortgage(s)?

Have you, or did you ever pull a tri-credit report on yourself? If not, you should. The reason I ask is that 60 days after your bankruptcy discharge, all your creditors are required to post zero balances, and remove negative information. Do your mortgages show zero balances? If not, and they were part of your discharge, then they are in violation of a Federal bankruptcy discharge injunction; that means you have a lawsuit against them.

Anyway, to answer your question on if you can be foreclosed on….Yes! Even though you are making your payments, if the debt was part of your discharge, they can foreclose on you whenever they want. The reason is because they no longer have anything legal to hold you to the debt because the bankruptcy removed it. They still have the house, and the reason (probably) they have not foreclosed on you yet is because your house is not worth what the original mortgage. They are most likely not reporting your payments because they were require by law to report zero balances; you are doing them a favor at this point. You are paying on something that is not legally binding between you and the mortgage lender, but they are not complaining because you are paying.

Anyway, stop paying and save your money to move out and start rebuilding your life. Yes, you will need to rent, but this is not bad because you can start fresh and new.

 

[meghamann]

I did a chapter 7 bankruptcy. I am looking at my bankruptcy papers right now and it states Chapter 7 Individual Debtors Statement of Intention for both my mortgages and says I am reaffirming the debt and it is exempt from bankruptcy and will be retained by me instead of surrendered.

This is why I am very confused and scared now based on what has been said on here. I dont want to lose my house. I claimed bankruptcy because while I was unemployed I had to have surgery and had no medical insurance. I maxed our credit cards trying to pay for bills, food, etc. I have student loans to pay also. I have 6 kids and am a single mother. It was either I stop paying my mortgage or stop paying my medical bills, etc. I stopped paying medical bills and decided to then claim bankruptcy.

I pay my mortgage because I can afford to now. I am now employed and continue to pay my mortgage each and every month and am now scared my house will be taken away from me based on what the servicer has been putting on my statements and the face one was charged off.

I need to figure out how to get this fixed. Can I call my bk lawyer even though it has been almost 2 years now?

Thanks for your help. I appreciate it.

 

[despritfreya]

I did a chapter 7 bankruptcy. I am looking at my bankruptcy papers right now and it states Chapter 7 Individual Debtors Statement of Intention for both my mortgages and says I am reaffirming the debt and it is exempt from bankruptcy and will be retained by me instead of surrendered. This is why I am very confused and scared. . . I pay my mortgage because I can afford to now. I am now employed and continue to pay my mortgage each and every month and am now scared my house will be taken away from me based on what the servicer has been putting on my statements and the face one was charged off. . . I need to figure out how to get this fixed. . .

1. Your chapter 7 discharged the debt NOT the liens.
2. If you fail to service the liens (both of them) by making the regular monthly payments one or both of them can take steps to foreclose.
3. Your statement of intentions is just that, a statement of what you intend to do. Without the signing and court approval of a Reaffirmation Agreement, it has not legal ramification.
4. There is no requirement to enter into a Reaffirmation Agreement for a debt secured by real estate.
5. So long as you voluntarily remain current on a loan secured by real estate the lender(s) may not attempt to foreclose.
6. It would have been a mistake to sign a Reaffirmation Agreement on a loan secured by real estate and, IMO, malpractice for the attny to allow you to do so - especially if you are not in an anti-deficiency state.
7. The charge off has no "legal" meaning other than the debt was discharged. If you stop paying the 2nd the lender may foreclose. Of course, if there is no equity in the property after consideration of the 1st mortgage, it is unlikely that a foreclosure by the 2nd will happen, but if you do not pay then you take the risk.

JUST PAY YOUR MORTGAGES AND YOU SHOULD BE FINE.

Edt.: I must correct the above (#5) and have edited the above to conform with my findings. #5 apparently is not applicable in the 7th Circuit. Wisconsin is in the 7th Circuit. Per, In re Edwards, 901 F.2d 1383 (7th Cir., 1990) your district does, indeed, potentially require the signing of a Reaffirmation Agreement. "We hold that 11 U.S.C. Sec. 521 requires a debtor to choose between the reaffirmation, redemption or surrender of property abandoned from the estate or exempted from discharge".

The "stay & pay" option allowed by the vast majority of jurisdictions does not apply. However, if you are current, it is highly unlikely that a lender would even consider excersising any provision contained in the loan documents that holds that the filing of a bk is an "incident of default". Further, one would have to research Wisconsin law to determine if such an ipso facto clause is even enforceable.

Des.

 

[nextwife]

Additionally, someday you may wish to sell this property are perhaps when values are back up. While you are not personally still responsible for the debt, the amount needed to release the security interest continues to decrease as you pay.

 

[justalayman]

Additionally, someday you may wish to sell this property are perhaps when values are back up. While you are not personally still responsible for the debt, the amount needed to release the security interest continues to decrease as you pay.

not personally responsible for the debt?

I am looking at my bankruptcy papers right now and it states Chapter 7 Individual Debtors Statement of Intention for both my mortgages and says I am reaffirming the debt and it is exempt from bankruptcy and will be retained by me instead of surrendered.

I don't know what the deal is with the charged off mortgage but if they were reaffirmed, doesn't that mean that it is as if the BK never happened essentially?

 

[nextwife]

not personally responsible for the debt?




I don't know what the deal is with the charged off mortgage but if they were reaffirmed, doesn't that mean that it is as if the BK never happened essentially?

The plan filed called for them to reaffirm, but it sound's like they did not do so. I see many Ch 7's in which the plan says reaff, but they really don't.

Of course, they need to tell us if a reaf was signed and filed.

 

[meghamann]

So do I need to check with my mortgage company to see if this "reaffirmation" was done? I just refinanced my first mortgage a couple of months ago if that means anything. I am just really confused about the 2nd one which now was charged off. I guess I just don't want to get screwed. Are there certain questions I should be asking the mortgage company to determine what my obligations are?

 

[nextwife]

If the mortgage is still unsatisfied, the jr mortgageholder CAN foreclose their security interest regardless of whether you are or are not still personally responsible the debt. If you wish to keep the house, pay the mortgage.