What happens if you do not re-affirm your mortgage in bankruptcy?

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What happens if you do not re-affirm your mortgage in bankruptcy?

I filed bankruptcy and my lawyer never mentioned anything to me about filing for reaffirmation of my mortgage or vehicle. Since the bankruptcy, I have paid off my vehicle and continue to pay my mortgage on time. I have received the title to my car. If I continue to pay on my mortgage, will the house stay in my name or because I did not file a reaffirmation, does the bank have all legal rights to the house even if I am paying the mortgage?

Asked on October 17, 2011 under Bankruptcy Law, North Carolina

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Not reaffirming a mortgage obligation means the property remains encumbered by the mortgage but you are no longer personally liable for the debt. This means that you cannot be sued personally if you were to abandon the property for any amounts still owed under the mortgage (e.g. if your home was foreclosed on). 

However, since you no longer have any obligation to make monthly payments, you are not personally accessing any credit. Consequently, your credit report will not reflect the payments that you make. 

Your lawyer more than likely did not have you reaffirm the mortgage on purpose. Many attorneys try to insulate their clients from further liability in the event of a foreclosure (as explained above).  Unfortunately they fail to fully explain this to their clients.

Bottom line, the house remainsd in your name and as long you continue to make the payments on time, you should be fine.


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