If we filed for Chapter 7 and cjose not to reaffirm our mortgage, what happens if we now walk away from the home?

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If we filed for Chapter 7 and cjose not to reaffirm our mortgage, what happens if we now walk away from the home?

It was discharged 3 years ago. We have continued to stay in the home and make the monthly payments despite the $0 balance on our credit report. What will happen to our credit now if we need to walk away from the home or do a short sale? Has the damage already been done or will we now have to deal with another mark on our credit report?

Asked on November 17, 2012 under Bankruptcy Law, Washington

Answers:

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

Answered 8 years ago | Contributor

Once you chose not to reaffirm your mortgage, the lender woud have stopped reporting your payments to the credit bureaus since you were (and are) no longer liable for the repayment of the mortgage loan. Consequently, all of the payments that you have made since your discharge have not gotten reported. Therefore you got no positive notations on your report by making your payments on time and in full. However, by the same token, there wil be no negative reporting notations on your report now if you walk away (or do a short sale).


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