You Won't Believe This--Help!!!!



OK, I'll try to condense this. We filed a Chap. 7 1/03. At the 341
meeting with the trustee, he asked if we were surrendering our
property. We answered in the affirmative(it should be on the tape he
made). We stopped making mortgage payments per our attorneys advice,
in order to allow the lenders to go ahead and eventually foreclose. In
other words, we did not re-affirm our mortgage debts.

Lender #1 showed an amount of $76000 owing on the property, lender #2
showed approx. $40000 and lender #3 $36000. The last one has not been
heard from since the discharge of the BK 7, which took place 4/29/03.
Meanwhile events progressed as usual. We kept getting bills from
lender #2 until I called and informed them that we had surrendered the
house in the BK, after which they ceased sending us bills. Lender #1
had asked for relief from stay in order to pursue foreclosure.

We are now in 2004. #1 was due to hold a sheriff's sale in January
BUT lender #2 paid the delinquent amount to #1 in a lump sum payment,
and held their own sheriff's sale on 4/1/04. No bidders.

Now we received a letter from lender #1 stating since we intended to
keep the property, why hadn't we made the March and April monthly
payments? I had to call them and tell them everything--that it was
lender #2 that paid the arrears and held a sheriff's sale of their
own. Lender #1 thought WE had paid the arrearage and says our names
are still on the mortgage, that we are responsible for the $76000 and
this was the first they heard that it was lender #2 who had brought
the mortgage up to date.

I have just gotten off the phone with various attorneys involved, but
of course it is Friday and no one is available. I thought the whole
reason for the Chapter 7 was to surrender this property, which is way
upside down and in pretty deplorable condition since it was broken
into and vandalized as we moved out over a year ago. We even had a
realtor try to do a short sale. He had two serious buyers, but lender
#2 dragged its heels so long on a payoff figure he lost the sales. In
his own words, it appears as though this lender was deliberately
trying to sabotage his deals so they could hold their sheriff's sale.
If they thought they would make a killing at the courthouse, the joke
was on them....

It appears that lender #2 was under the mistaken impression we were
keeping the house. That is the only thing which makes sense out of
this mess. I was told that if we don't make the mortgage payments we
will be reported delinquent on our credit reports and they will
eventually foreclose.

Can anyone make sense of this mess? We have just gotten our lives
back together, are looking to buy a new property and getting info on
sub-primes who lend to people post-BK etc. We raised our credit
scores over 100 points and climbing. Now we are being told we are
responsible for a $76000 mortgage that was supposed to be taken care
of by the BK 7 through surrender of the house.

Anyone of the legal persuasion, can you make sense of this mess? I
have already gone through one "nervous breakdown" over having to give
up our home of 15 years, and now can barely type this. Where did this
train get derailed? Is lender #2 trying to get out of its obligation
of paying off #1 if the house is sold? Just what is going on here?

It's Friday, no attorneys in sight. Any comments, etc. would be most
welcome before I lose my mind (again). Please post any ideas or
thoughts--it's going to be one hell of a weekend for me.



Brett Weiss

This is really simple.

You have *no* personal liability for loan #1, #2 or #3. Lender #1 saying
that they will make a negative credit report is a clear violation of the
discharge stay. *Any* contact with you other than formal notice requirements
associated with a foreclosure is a violation of the discharge stay.

I suspect that a letter from a bankruptcy lawyer "reminding" the lenders of
their obligations to a discharged debtor will end things very quickly.


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The Small Print: This response is for discussion purposes only. It isn't
meant to be legal advice and you shouldn't treat it as such. If you want
legal advice, speak with a local lawyer familiar with your state's laws who
can review *all* of the facts and the law applicable to your situation.




Thank you for your wise counsel, as always. You can see why I became
so upset.
The first mortgage holder also told me they can't remove (post
discharge) bogus delinquencies on reported on our credit by the lender
who was actually involved with the BK--that one went bankrupt and were
taken over by this goofball--as they weren't the ones who reported
them doesn't wash with me either. It makes us look like we owed $5600
when we never missed a payment until we filed for BK. I will write
the bureaus explaining the situation and if that doesn't work, will
contact the FTC. Just because a lender went bankrupt doesn't relieve
them of this obvious violation in reporting post-BK delinquencies.

The question of why the lender believed we "stated we were going to
keep possession of the collateral" is something I would like to know
the answer to. Each person I spoke to had a different answer "we
didn't know who made the payment" to "Aurora thought you were keeping
the place and brought the loan up to date for you"--bless their
pea-pickin' hearts, I guess.

When their attorneys call back on Monday (if they do), I will simply
inform them of what has transpired since the first lender is
pretending they don't have a clue, and the second acted very upset and
confused by my phone call. Maybe their own legal counsel can explain
how it all works to them because they sure don't understand.

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