Can I walk away from my current house if a reaffirmation letter was never signed?

UPDATED: Aug 24, 2011

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Can I walk away from my current house if a reaffirmation letter was never signed?

I filed  Chapter 7, 2 years ago but retained one of my homes. The attorney never told me anything about a reaffirmation letter so I never signed one with the bank. When I called them (they hold my current home loan), they advised me that because I never signed a reaffirmation letter, they were never going to report to my credit bureau again. I was also told (by my attorney), that if I ever want to walk away from this property, I can without any liabilities. Is this correct?

Asked on August 24, 2011 Nevada


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

Answered 11 years ago | Contributor

Not reaffirming a mortgage obligation means the property remains encumbered by the mortgage but you are no longer personally liability for the debt. In other words, you cannot be sued personally if you were to abandon the property and a foreclosure sale generated less than what was owed.

However there is a negative about not having personal liability. As you have become aware, since you no longer have any obligation to make monthly payments, you are not personally accessing any credit.  Accordingly, your credit report has not reflected the payments that you have made. 

By the way, your attorney most probably did not have you reaffirm on purpose. Many lawyers try to insulate their clients from further liability in the event of a foreclosure by not having them reaffirm the mortgage loan.  Unfortunately they fail to fully explain things to their clients.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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