re-affirming my mortgage

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re-affirming my mortgage

I filed bankruptcy July 2004, and just found out, my attorney did not file a re-affirmation on my house. Can I just walk away, or will there be a foreclosure on my record, causing me to have to wait an additional 3 years to qualify for a mortgage? Furthermore, since I still receive a tax bill, will this also be on my credit record if I don’t pay it?Is a non affirmed mortgage like a foreclosure?Thanks, John

Asked on May 11, 2009 under Bankruptcy Law, Illinois

Answers:

N. K., Member, Iowa and Illinois Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

You did not specify whether you still keep your payments current or already on default. Because if you make your payments up to date, a reaffirmation may no longer be necessary as they won’t go after your property anyway. On the other hand, non-payment coupled by the non-reaffirmation of your home mortgage may result into “freedom” of personal liability under that loan because of bankruptcy, but that would not prevent the creditor to take action if there is a lien against the property. You can either pay the creditor the amount of the lien to keep the property or, eliminate the lien by surrendering the property or foreclosing on the lien. Therefore, a record of foreclosure is likely reflected. A mortgage reaffirmation does not eliminate your personal liability. Instead, it survives both the creditor’s lien and personal liability under bankruptcy. So, whether reaffirmed or non-reaffirmed mortgage, if the debtor is at default, foreclosure proceedings may follow.

On your question concerning taxes, please bear in mind that bankruptcy does not eliminate tax liabilities nor wipes out certain tax obligations, although substantial income tax relief can be obtained. It is very important for you to determine the type of tax bills you are receiving because you could still have tax liabilities prior to your bankruptcy filing that you need to settle. The more risky it becomes for you if you take IRS matters less seriously or ignoring your tax bills.


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