Mortgage not reaffirmed and selling home after discharged

[Griffzan]

I'll ask for forgiveness in advance as this will be be both lengthy and possibly confusing (at least for me). I am currently going through a divorce and the only note of contention is the marital home. I filed for bankruptcy last year (chapter 7) and it was discharged in May of the same year, 2020. The mortgage was not reaffirmed though it was the only asset I did want to reaffirm. I communicated this with both my lawyer and the judge but found out several months later that it was, in fact, not reaffirmed. I continued making house payments but I did not receive monthly statements, except to say they had received my payment. In any event, fast forward to today and I may be forced to sell my home though I don't want to. My divorce lawyer is not familiar with bankruptcy law or the specific loan and if any stipulations exist to selling my home (USDA Rural development loan). So here I am.... My questions are, Being the mortgage is in bankruptcy and as such hasn't had any of my payments applied to the balance since April of 2020 (There is a separate bankruptcy division where my payments are being kept)
Can I even sell my home??
Secondly... I receive a subsidy on the home in the form of a 1% interest rate which I will have to pay back in the event that I sell the home before it's paid off.
In the event that I have to sell my home, who incurs any expenses to selling, including pay the subsidy back?

 

[Just Blue]

I'll ask for forgiveness in advance as this will be be both lengthy and possibly confusing (at least for me). I am currently going through a divorce and the only note of contention is the marital home. I filed for bankruptcy last year (chapter 7) and it was discharged in May of the same year, 2020. The mortgage was not reaffirmed though it was the only asset I did want to reaffirm. I communicated this with both my lawyer and the judge but found out several months later that it was, in fact, not reaffirmed. I continued making house payments but I did not receive monthly statements, except to say they had received my payment. In any event, fast forward to today and I may be forced to sell my home though I don't want to. My divorce lawyer is not familiar with bankruptcy law or the specific loan and if any stipulations exist to selling my home (USDA Rural development loan). So here I am.... My questions are, Being the mortgage is in bankruptcy and as such hasn't had any of my payments applied to the balance since April of 2020 (There is a separate bankruptcy division where my payments are being kept)
Can I even sell my home??
Secondly... I receive a subsidy on the home in the form of a 1% interest rate which I will have to pay back in the event that I sell the home before it's paid off.
In the event that I have to sell my home, who incurs any expenses to selling, including pay the subsidy back?

What state?

 

[despritfreya]

Your bk does not stop you from selling the home. Your divorce decree controls the rights of the parties (you and your ex) as it relates to this property (property division).

While you are not personally obligated on the promissory note you signed due to your discharge, that note is secured by the mortgage. The mortgage is a lien against the property. The lien passed through the bk unaffected and payment of the lien when you sell the home is subject to all of the terms and conditions of the note. Your payments have been applied as necessary to service the lien.

When the home is under contract, the title company will ask for a payoff statement from the lender (lienholder). The payoff statement will include the principal remaining, interest on that principal, any costs associated with the loan etc. It is no different than had you not filed bk. So. . ., you will pay out of the sale proceeds what is required to pay regardless of the discharge, and the lender will release its lien at the same time. If the sale proceeds are insufficient to pay the lien then, if you want the sale to close, you will either have to come up with the difference or get the lender to agree to a short sale.

As to the subsidy, you have not indicated if it is wrapped into the mortgage or is a separate "loan" that is also secured by the property (such as in the nature of a second lien against the home). If the subsidy was wrapped into the mortgage, the payoff will include it as well. If the subsidy was a separate obligation and there is a second lien on the property to cover it, the title company will get a payoff for that. If this "obligation" is secured by the home it will be paid at close of escrow.

If the subsidy is simply an unsecured obligation and you properly listed it in the bk, you may not have to pay it. However, what does the divorce decree say? Obligations arising out of the divorce decree are generally not dischargeable in a Chapter 7. Ask your bk attny.

Hope this helps explain things a bit.

Des.