Selling house after Ch 7.

[Bob Walker]

Well it has been a while since I've posted to the forum, but I'm in need of some of everyone's expert advice now.

My wife and I had our discharge back in 2007.
We owe $250k on our 1st mortgage and $57k on the second.

As most of you know, a HELOC is not dischargable in BK, but the liability is. If I understand this correctly, if our house sells for say $250k, enough to cover the 1st, then the 2nd is written off by the bank. Correct?

My credit shows a $0 balance oweing for the 2nd since our discharge, but I am looking for more specific advice on selling our home after Ch 7 is done.

What happens to the 2nd mortgage if the home sale doesn't cover it all? Are we truly forgiven from that debt?

Thanks

Bob

[CCsAreEvil]

What's your purpose in selling the house?

[mtbc]

I am neither an expert nor a lawyer!

As I understand it, yes, they probably can't come after you for the HELOC money. However, I would worry that the lien still attaches to the property, and nobody in their right mind will buy it with that lien there. You may have to settle with the HELOC lender to get them to remove the lien if you own the home and wish to sell it. I hope I'm wrong about that!

[liz417]

Mtbc is correct, there may be a lien on your house from the 2nd loan. If there isn't enough equity to cover both loans AND you didn't reaffirm either loan, that loan was discharged, you are able to walk away free and clear! Good Luck!

[maddog2112]

Bob walker, did your 2nd mortgage just charge off the account? If so,is the balance of your 2nd the same as it was when it got charged off, as to avoid any increase in fees and interest? Just curious, since I have a similar situation, except the 1st and 2nd combined is about equal to what my house would sell for. I`m continuing to pay both un affirmed after discharge.

[2manybills]

I'm still paying both. I was thinking of trying to settle the 2nd. They still have a lien recorded against our property.

I would love to start negotiating a settlement with Wells. We are about $50K upside down on our house.

[Bob Walker]

Thanks for all the replies everyone. In answer to most of the questions:

The balance remained the same after discharge.
We did not reaffirm the loan.
The balance on credit report shows $0.
The house will probably sell just enough to pay off both mortgages, pending of course not so much in closing costs.

So I am guessing that my next step is to call the bank and see what they say about the 2nd. I've got to at least keep them in the loop on this, but right now like most people underwater in their home I could care less about my credit right now for the next seven years.

[CCsAreEvil]

You did not answer my question from the 1st reply. Maybe I'm missing something, but I'm trying to understand why you are putting in all this effort to sell your home. There does not appear to be any gain at all for you by YOU spending the time to go through the process to sell your home. You are basically doing the banks a favor. They will love you for it, but you gain nothing from it.

If you were going to make any money on the sale, I would say it's worth it. It does not appear to be so in this case. If you truly just want to let the house go, just stop paying on both mortgages (pocket the money as savings for the future), and let them carry out a foreclosure process? You'd also live rent free for a number of months.

I'm not trying to be rude but just trying to understand your motives. Do what's best for you and your family.

[OhioFiler]

You did not answer my question from the 1st reply. Maybe I'm missing something, but I'm trying to understand why you are putting in all this effort to sell your home. There does not appear to be any gain at all for you by YOU spending the time to go through the process to sell your home. You are basically doing the banks a favor. They will love you for it, but you gain nothing from it.

If you were going to make any money on the sale, I would say it's worth it. It does not appear to be so in this case. If you truly just want to let the house go, just stop paying on both mortgages (pocket the money as savings for the future), and let them carry out a foreclosure process? You'd also live rent free for a number of months.

I'm not trying to be rude but just trying to understand your motives. Do what's best for you and your family.

I think you're beating your head against a brick wall. Bob's not going to understand.

[Bob Walker]

Hmm...

So let's see, we have a Ch 7 discharge back in 2007. If we allow the house to go into foreclosure then our credit is hit for the next seven years. This would mean that both the BK and foreclosure would most likely come off at the same time.

However, with only just the BK and no foreclosure, we would be able to sell our house and get another one via VA. I'd have to check to see if a foreclosure would hurt the possibility of getting a VA funded loan.

Believe me, I do understand all this, I am just trying to find a way to get us out of this problem with the house debt and into a new smaller home without any more damage to our credit.

Bob

[Bob Walker]

According to the VA website, it appears that a foreclosure would most likely create another two year waiting period to qualify for a VA loan.

[CCsAreEvil]

So let's see, we have a Ch 7 discharge back in 2007. If we allow the house to go into foreclosure then our credit is hit for the next seven years. This would mean that both the BK and foreclosure would most likely come off at the same time.

Oh, sorry, I am clueless about VA loans and the full ramifications of foreclosure after BK. I did not know your credit can take an additional hit on already discharged debt. I thought the foreclosure was just public record. Also, I've read it only lasts 3 years. But maybe that depends on your state. If this is true, that sucks if your state keeps it on your record for 7 years.

So, does the foreclosure become attached to your credit report and does it affect your FICO score even after the debt attached to the foreclosed property was discharged? Does anyone know? Would be nice to know for the future.