Is mortgage forgiven in bankruptcy?

Is mortgage forgiven in bankruptcy?

Although Chapter 7 bankruptcy gets rid of your personal liability on your mortgage, the lender can still foreclose if you stop paying. Filing for Chapter 7 bankruptcy will wipe out your mortgage loan, but you’ll have to give up the home. So, if you want to keep the house, you must continue paying your mortgage payment.

What does it mean if a mortgage is discharged?

When your mortgage is paid off, a mortgage discharge should be recorded with the Registry of Deeds to clear your property’s title. A discharge is a document (usually one page) issued by the lender, usually with a title such as “Discharge of Mortgage” or “Satisfaction of Mortgage.”

Can a mortgage that was discharged in bankruptcy be refinanced?

What Wells Fargo told you is partially right, and partially wrong. If the only issue is that you did not reaffirm the home loan in your bankruptcy, you will be able to refinance your loan with a different lender. Your lawyer was not remiss in advising you not to try to reaffirm the mortgage.

What happens when a debt is discharged in bankruptcy?

If a debt is discharged in bankruptcy, the lender is prohibited from trying to collect on that debt. The lender cannot sue you, call you, or send you a bill or mortgage statement.

How does reaffirmation of a mortgage work in bankruptcy?

(Learn more about how reaffirmation works in bankruptcy .) The effect of reaffirming a mortgage is that if you later default on the loan and the lender forecloses, you will be liable for a deficiency (the difference between what you owe and the value of your home).

Can a discharged mortgage be refinanced by Wells Fargo?

When you refinance a discharged mortgage loan with the same lender who currently holds the mortgage, the proceeds of the refinance go back to that lender to repay the loan balance. This violates the bankruptcy discharge and that’s why Wells Fargo won’t refinance your mortgage.

Previous Post Next Post