Expert: Terry Leeders - 5/13/2008

Question
Hi, My husband and I Filed a chapter 7 bankruptcy 6/05 and were discharged 11/05.In 2007 we wanted to refinance our home because we were on an ARM and found out our house was never reaffirmed. The house does not appraise for the loan amount we need plus we called the mortgage co and said they could't help us because they only deal with convential loans and with us being out of bk we can only qualify for FHA. We have paid on the house and they never disclosed to us the house was in the bankruptcy. 1/08 we stopped making the payment on the house because without refinancing we can not afford the payment. It is 5/08 and have heard nothing from the co. My question is due to the circumstances would this be a normal foreclosure? How long do you think we have here? Is the mortgage co at fault for still collecting our payments? Could we get those payments back? We paid ins and taxes on a house that does not belong to us. One more thing we are still on the title of the home. Thank You

Answer
If you did not reaffirm the mortgage, technically it was discharged thru the bankruptcy case.  So, if you stop paying, they will go thru the normal foreclosure process (foreclosure is the process to transfer the title back to the lender)  You can always make payments as it is still your home, and they can accept them as the lien holder on the home, they just cannot collect on the debt directly. You will not be able to get the payments back. The home does belong to you until the foreclosure goes thru, you can sell, you can refinance, or you can stop paying and let it go back.  You will not owe anything further on the mortgage loan since it was discharged thru the chapter 7 bankruptcy case.