Mannerheim

Bankruptcy vs. Foreclosure

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Hello

This is my bankruptcy history

Date Filed: 8/25/2008

Bankruptcy 13 – Dismissed

Ref.: #0860600PJS

Michigan Fed Bk Ct – Det

Liability: $0.00

Date Filed: 4/16/2009

Bankruptcy 7

Ref.: #0951913SWR

Michigan Fed Bk Ct – Det

Liability: $0.00

After the bankruptcy, we were foreclosed upon, and lost the house. There was a debt of about $465,000 owing. A buyer bought the house at the sheriff's sale for $465,000.

On our current credit report, our lender lists our current liability as $435,000ish. and that foreclosure proceedings have "begun".

My overall credit report shows my current liability as the $435,000 plus my car loan.

How should I handle the mortgage situation. I know that sometimes it's better to leave things on your report, but a $435,000 foreclosed debt can't be helping my scores.

What should I do?

THANKS!

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The house is gone right?

If it is, then the best thing you can do is try to get the data furnisher on an FCRA violation...then sue and get leverage to get it off your credit report...

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When you filed the Ch 7 you were successfully discharged - right?

Did you include the house in your BK? You have to include all debt so I assume you listed the mortgage as part of your debt when you filed.

If you included the debt, the lender would still have to complete the foreclosure process after your discharge. If that is what happened then your mortgage tradeline should read IIB and zero balance from the BK. The BK discharges your personal liability to repay the debt. The lender has to foreclose on their lien in order to actually get the house back into their name. It has no effect on your credit after the BK because the tradeline is already marked iib (included in bankruptcy). Your tradeline needs to show a zero balance as of the date of the BK filing date

If you reaffirmed your mortgage then that is a different story. To have an official reaffirmation, you would have signed documents from the lender that would have been filed by your attorney prior to your discharge. It is not typical to reaffirm your mortgage in a BK. Did you reaffirm your mortgage?

Edited by Denita
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Yep, the house sold at Sheriff's sale for $465,000, which happens to be the exact amount that the mortgage company said that we owed. (The original mortgage was for $318,000, so they're really making some nice fees on this one). A second mortgage was for $80,000, but that doesn't appear anywhere on my credit report anymore. (Isn't that strange?). (It would've been totally unsecured, as our market dropped about 60%).

So, it is agreed that the 1st mortgage holder should list me as "0", and "included in bankruptcy". Do I do this via a debt verification, and insist that they provide documentation as to my payment history, their reporting information, and the status of my account?

THANKS!

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You may have an even better process. What the lender is doing is reporting the tradeline incorrectly. It is considered a violation of the discharge injunction.

If I were you I would first notify them (the creditor) that they are reporting incorrectly. Give them 30 days to correct (30 days at the most).

If they don't correct the tradeline, then bring suit against them. The damages to you are much higher because they knowingly have placed this on your credit after you received a discharge. You can collect higher damages for this type of suit than you can with a FDCPA violation.

You might be able to get them to not only correct the tradeline but vacate their judgement too. Especially the one that filed the judgement after your BK.

Check with your BK attorney, sometimes just a letter from him will remove the incorrect reporting.

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Hi again Denita.

Thanks again for all your help. Back in 2006, I really got into this, and was happy to help lots of people, as well. It's nice to see that the circle continues.

The mortgage default did not end up in a judgment. Sometimes, if I recall correctly, even if something is negative, it is still a net positive on a credit report. For example, my mortgage balance is roughly $465k. Even though it is showing 95% negative reporting and a foreclosure for the past two years, is it actually helping me at this point, because it is a high value loan (or am I nuts)?

If I got the mortgage company by the neck on this one, can you suggest how I could play hardball, and make some demands. IE, remove within 30 days and also ..., or I will seek damages in court. What would you suggest?

THANKS AGAIN AND AGAIN!

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Your location shows Finland. Are you in the US or outside the US?

If you are in the US, the tradeline should read iib and zero balance.

If you read the stickies at the top, LadyNRed has an excellent post(s) about how the tradelines are supposed to read and how they are a violation of the discharge injunction.

If you are outside the US, I have no idea...lol.

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Thank you. Back in 2006, I wanted to be completely anonymous, so I put Finland (dumb, I know). I thought that when I started back again, that I had changed it back to Michigan.

No. Not dumb at all. In fact, its a good idea!

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