Discharged Bankruptcy – Why did my mortgage stop reporting?
Your Credit Minute Show Notes:
- 00:00 Credit repair. So, this is your credit question of the day. So, let’s say someone has just filed a chapter seven bankruptcy. All of your debt has been discharged but you decided to keep your home. Okay? The mortgage hasn’t been discharged, okay, but it’s no longer appearing on your credit report. You’ve been paying your mortgage on time. You got to keep the house, um, but you want the positive credit on the report and you’re wondering you know, what gives? Why is it not there?
- 00:24 Well, here’s why. Okay, when you file a bankruptcy typically what you’re doing is you’re listing all of your assets as well as all of your liabilities. Liabilities being anything that you owe money on. Okay? And although the bankruptcy hasn’t been discharged, the mortgage companies will typically remove that record automatically from the credit report. Okay?
- 00:45 And the reason for that is, you remember that bankruptcy is a protection. It’s to protect you against creditors while you are going through a hardship, okay? So, if the mortgage company decides to report on the credit, it could be perceived as there’s trying to collect on a debt. That’s a major violation, a major violation of all the different bankruptcy laws that are out there.
- 01:03 So, by default, what will happen is the mortgage company zero’s out that record. Okay? They do this um, because it’s a liability. They don’t want to be perceived as a company that’s trying to solicit you for money and violate the bankruptcy court, um, so it’ll get removed.
- 01:19 Now, there is a way to get it back on, okay? And actually, there’s a caveat to this. Keep in mind that because it was listed as a liability, technically you could walk away from that house, okay? So, let’s say you wanted to walk away from the house, um, they can’t come after you for that mortgage. Okay? So, keep that in mind. Because it was listed as a liability you have that protection.
- 01:38 Now, if you continue making the payments on the mortgage, what you wanna do is, you wanna get it reaffirmed. So, the only way to get it back on the credit report is to go through a small process of reaffirming the debt, okay? Your bankruptcy attorney can assist you with this. They’re gonna file some paper with the court. They’re gonna get that reaffirmed. Once that’s done, you can reach out to the mortgage lender, show them the paper work and that’ll give them permission to actually start reporting the debt back on your credit report, and you can start getting the positive reporting from that.
- 02:07 It’s a bit of a process. It’s definitely worth it if you’ve been paying it on time. It’s a great asset. You have tons and tons of on time payments on this account, you want to get the positive reporting of that, okay?
- 02:18 Uh, this could happen with some other debts too. So, let’s say the bankruptcy court asked you um, or allowed you to keep your automobile, so you can get you know, back and forth from work. The same thing could happen with that, okay?
- 02:29 There are a couple of things that won’t get removed from the credit report through a bankruptcy. One of those is student loans, or federally backed student loans, as well as child support. So, those actually won’t come off.
- 02:40 Um, any additional questions regarding this specific topic, and how to get these reaffirmed, guys feel free to reach out to me at firstname.lastname@example.org. If you have a credit question you’ll like me to answer, I’d be happy to do that.
- 02:52 Thanks guys. Have a great day.