Expert: Terry Leeders - 8/20/2008

Question
In 2005 we filed bankruptcy, towards the end of it we told our lawyer that we never got anything from the mortgage co saying they would reaffirm with us, and he told us just to keep the payments going, so we did.  Our mortgage co still sent us a statement each month, but it said it was not asking us for money but if we wanted to we could use the coupon and send a payment.  That is what we have been doing. Now we have fell behind in our payments because my husband lost his job and we have fell behind in all our bills. We think we are going into foreclosure, even though we have heard nothing from them yet. My question is ...since there was NO reaffirmation, can we sell the house and try to get money out of it,or is it considered a part of the bankruptcy and wwe just have to walk away. or if it goes into foreclosure and they sell it and dont get enough money out of it are we liable for the balance?  We  live in Indiana.    thank you for your time     Amy

Answer
If no reaffirmation was signed, you can surrender the home and not owe another penny on the debt.  You can sell it and pay off the loan too, and keep the proceeds.  However, you won't get a windfall, as the lien still is there, that doesn't strip off with bankruptcy.  Or, you can continue to make the payments to keep the home.