What if we stopped paying on cars, mtg and heloc after discharge -not reaffirmed?

[PoorGrammyinBK7]

Just wondered about the scenario - I doubt we would do this, but just had some questions:

Does interest still accrue on debt that is discharged?

How long would it likely take for foreclosure or repo? HELOC is at a bank and first mortgage, plus 2 cars are at CU.

Would lenders ever negotiate a payoff on discharged debt after discharge?

So far, we are able to do a ride-through, even though they said they wanted reaff agreements - neither the bank nor the CU got them to us with the correct info, so they were never signed. There has not been a peep from the bank or CU. They accept payments as if we never did BK.

I ask, though, because, with the current economy, I am starting to worry that we could be doing something not too smart, since the cars and the house are all upside down or we owe about what they are worth at best, and we are theoretically in a position to "walk away" from all the debt (about $98,000 total).

Plus some things have changed since we filed. We have a chance at a very cheap house rental (almost free). If we stay here, our housing costs are about $1,150 per month - versus about $450 with the other option. Its also much closer to his work so that would save on gas.

Husband now has a new job, paying just slightly more than his old one.

And a very wealthy relative just sent us an unexpected Christmas gift, which I understand we can keep and which should be enough to buy a newer used car - with cash - maybe even a new one with what is going on in the industry! Or even 2 used ones possibly, with less miles than ours. But then we wouldn't "know" those cars, so we hesitate to do it. Haven't been car-shopping in a while, so I may be off base here.

Our car payments are about $565 (for both), with one ($250) to be paid off in 12 months, but they have 102K and 67K miles on them, plus maintenance costs and gas (both gas guzzlers). We have done $1500 in repairs to them this year, so they are in pretty good shape, but...

So anyway -has anyone actually walked away AFTER getting discharge and AFTER payng for a while on discharged debt that was NOT reaffirmed? If so, I would appreciate your sharing your experiences -- or if any experts (HHM?) have advice, please feel free to share it. What do you think?

Thanks!

PG

[TEW]

Here my thoughts stop paying on all the things you owe pre BK and get rid of them house cars anything else you don’t need to be paying for.
Read HHM’s post on car buying pay attention to the part about buying NEW cars.
Get your self 2 better cars and put the rest on the money in your emergency fund. Possibly thing about locking some of the money away so you can not get to it. And have a merry Christmas

[yeahdischarged]

Yes, we did. We kept a car and mortgage non-reaffirmed and planned to keep them. The car started falling apart and had major repairs after about 6 months. We did the math and realized it wasn't smart to keep an upside down car with major repair bills when we legally owed nothing on it. We called the lender, stopped making payments, and it was 4 months before we finally forced them to come get it. Literally repeated phone calls. We had purchase another car for cash and wanted this vehicle off our property. Ended up dropping it off at the sheriff's office, leaving the keys inside and notifying the lender. The came and got it that week. lol

And the house - we kept making payments on it for 1.5 years after chapter 7 discharge (new laws). We found out we were being transferred, the house was too upside down to sell, so we stopped making payments. The bank didn't file any motions for 5 months, and didn't have the sheriff's sale for 8 months. Had we not moved, we could have stayed there at least that 8 months without paying anything. Foreclosure process is complete. (House is currently on the market for $40,000 less than we paid and not moving.)

Both accounts remained the same on our credit reports - both said "IIB - included in bankruptcy". Nothing ever changed. We did NOT get a new and separate public record for foreclosure as many have warned on here. I always wondered about that - how can a lender file a public record against an asset you no longer legally owe a dime on?

Anyway, didn't affect us in the least. We used our bankruptcy to truly wipe our slate clean. We were able to get a loan on another used vehicle at 5.75% interest (large down payment and small loan to rebuild credit) a year after giving back the bk vehicle and have easily rented a home in our new state. (Not going to be buying a home in this market even if we could! Never again am going to purchase something on credit and have negative equity in 30 days.)

[PoorGrammyinBK7]

Thanks to both of you for your replies - yours is especially interesting, yeahdischarged. I wondered if there would be another ding on credit report if we walked away from the house later. What you said makes sense as to why there shouldn't be. Still have not decided what to do, but I do appreciate your input! Thanks.

[Stilltheone]

I wanted to add to your question.

For the last 3 months or so, we've been behind on absolutely everything we own. We didn't reaffirm our house, but did our car.

We got a letter last week, on Christmas Eve no less, from our mortgage company (a division of Lehman Brothers, ironically). We had yet to pay Nov.1 and Dec 1 payments.

The letter we got basically stated that if we didn't pay both payments by the end of the month, they were going to foreclose on us....for being behind 2 months, essentially.

The funny part is is before we got the letter, I tried calling and making a partial payment, short of $400. They refused it.

So, while other mortgage companies don't start foreclosure processes until 5 months, mine was ready to begin it after only 2.

Luckily, my parents loaned us the money and we made Nov1 payment, so we are only one month behind, but it will start all over again next month. Fortunately, we'll get our tax return in about a month and we'll catch up.

Good luck to you! (Sorry for rambling)

[willsurvive]

Our attorney advised us to never sign a reaffirmation agreement for real estate, so we won't. We are definitely contemplating walking away. Never in a million years would I think we would be in this position, but my dh's job is directly tied to the economy (construction) so it would be dumb to be stuck in a house we can't afford to make payments on nor sell in this market. We aren't upside down, but we are equal we think. Oh and my dh just got a pay REDUCTION of 20% thanks to this economy, so now as it sits, our mortgage is close to 45% of our take home pay per month. That doesn't include utilities. It's so expensive!! We are trying to negotiate a loan modification with our lender, but we are in the very early stages, so we aren't sure anything will work. But then again, I'm nervous to sign anything even if we modified the loan, because at that point we probably would be held liable for any deficiency if we couldn't sell and ended up foreclosing. So many decisions!!

Our attorney also said that if our lender on our car doesn't send any reaffirmation papers, he won't push them too. Essentially if something happened to it and we didn't reaffirm, we could walk away from the debt legally. He said that if they do send reaffirmation papers, we have 60 days to "change our mind".

Good luck with your decisions. It's a huge decision that's for sure.