Chapter 7-Current Home Discharged-Want to Leave Property-Need Advice Please!

[mstnewlife]

I filed a Chapter 7 in Dec 2008. I petitioned to keep my house but everything was discharged and the house was not reaffirmed. I still make my monthly payments on time but have had so many problems with the house- I lost 1/2 of my home (Finished basement)when after a flood-the sellers did not disclose and hid black mold behind walls) 3 months to the day of purchase so I had been making due with 1/2 a home and gutted basement. I was recently remarried, now a family of 4 and would like to start over. I understand that I am not obligated to pay and that the bank can foreclose on the house. Should I stop paying and save money for a house or are there better options? We found a great property and are trying to get a home loan but don't know what to do with the current home.

Also, can someone advise if the house has already been discharged and it does foreclose will the foreclosure show on my credit report? Thank you for your help!

[goingcrzy]

Yes, you can walk away if you didn't reaffirm (which sounds like you didn't)

Depending on your state you may be able to live in the house rent free for 90 days to in some cases over a year.

It is not suppose to show on your credit report - BUT the banks are so screwed up you will want to double check your credit report after the fact. If it does show up, mail the agencies a copy of your discharge and they will remove the foreclosure.

While the foreclosure won't show up on your credit, it will show up in any title and/or public search. This will make it harder to get a new loan down the road. Make sure you understand the timeline for getting a new loan after a foreclosure. If you can find a competent real estate agent with short sale experience, you may be able to do that.

The banks like to see a proactive solution vs just walking away when it comes time to get a new loan.

Good luck!

[mrskal]

I would also add, keep insurance on the home until it is taken over by the bank or bought. I would defrinately stop making payments if it were me, it will probably take a while to forclose, depending on where you are. Are you looking to get on the mortgage on the new property? That may be an issue with a BK filed in 08. When was the BK finished, that may be the day they start the clock of when you can get a new loan. You can always start asking lenders. Keep reading here, lots of info. Good luck. I am new to this process and have learned so much in the last couple weeks.

[petiteprof]

Thank you all for your advice so far. We were told we had to wait 2 years from the discharge, which is 12/5 before we could apply for a mortgage. The house we want is a For Sake by Owner from friends of mine and they are willing to wait until December. So, we just don't know when to stop payment on this house. The house has lost so much value and we are not comfortable selling it because I was deceived by the previous sellers and don't know if anything else will go wrong. My main concern is if we give the house back to the bank or stop paying and walk away we won't get a mortgage for the new house. I just hate paying for a house where no credit shows on my credit report, is too small and lost over 50k in value at least. We just want to start over and the house we hope to get in December is a dream come true.

[petiteprof]

To clarify, my bankruptcy was discharged 12/05/08.

[goingcrzy]

soooo...

Are you going to try to walk away from your current home after your buy the new house? The banks consider this fraud. They will also run a title search and see your name is still on the current house. The only way (that I am aware of) for you to get a mortgage in that time frame is to sell your house the old fashion way.

[mrskal]

soooo...

Are you going to try to walk away from your current home after your buy the new house? The banks consider this fraud. They will also run a title search and see your name is still on the current house. The only way (that I am aware of) for you to get a mortgage in that time frame is to sell your house the old fashion way.

Not sure that its true, the house was discharged in the BK, if I read that right.

[petiteprof]

Yes, the house was discharged in 2008. I requested to retain but everything was discharged. I receive a statement each month saying that I am not obligated to pay on the loan but if I don't they can foreclose. Every month I pay it does not show on my credit report. It was 100% discharged.

[mrskal]

Where did you get the information that you could get a loan in two years after bankruptcy, seems like I have been seeing 4-7 years on anything I have read lately.

[Never_Again]

Well, you can apply for a loan two years after, but it doesn't mean that you will get it.

[petiteprof]

Two mortgage brokers I have been working with said two years and that things were looking good. We are saving money for a decent down payment. I am just going to stay optimistic. Regardless of whether or not we get the house in december, I have rebuilt credit am saving money and am going to move to another location one way or another, even if we have to rent/lease. The house has been discharged, has many problems and we need to move out.

[jillsthings]

You have a similar problem to ours. Our BK was discharged Oct. 2004. Our home is a 2 bedroom and has so many problems, we want to move! With 3 kids, 2 bedrooms just doesn't cut it. It would cost too much to fix all the problems, so it would just seem more beneficial for us to buy a new house and just walk away from this one.

[mrskal]

That is great to here. I hope it all works out for you! I am sure wherever you end up, it will be way better than the house you are in now. Stop paying and start saving! Good luck. Keep us posted.

[gmanmike]

soooo...

Are you going to try to walk away from your current home after your buy the new house? The banks consider this fraud. They will also run a title search and see your name is still on the current house. The only way (that I am aware of) for you to get a mortgage in that time frame is to sell your house the old fashion way.

Im not a lawyer but IMO since your current home is discharged (IIB $0 balance) you cant be committing fraud since you have no financial responsibility to pay for your current home. The payments you have been making are voluntary. They just have the right to take back property if you stop the payments. Maybe you should consult a real estate attorney to verify it 100%.

[Stilltheone]

soooo...

Are you going to try to walk away from your current home after your buy the new house? The banks consider this fraud. They will also run a title search and see your name is still on the current house. The only way (that I am aware of) for you to get a mortgage in that time frame is to sell your house the old fashion way.

Why is this fraud?

My husband and I plan on doing the same thing once he gets a promotion.

We are probaly $60k underwater in our current home. Once he gets his promotion, we plan on buying some land and building a home. If the mortgage company asks about our current home, we'll tell them we plan on keeping it/renting it out. With his new income, we could actually afford both mortgages. Once we get our new mortgage, ADIOS!