You go through a bankruptcy case - Chapter 7, Chapter 13, it doesn’t matter which - and come out the other side of the case. You didn’t reaffirm your mortgage, and have opted to continue making payments.
A little while down the road, you miss a few payments. The mortgage lender serves you with papers for foreclosure and you get angry. Hey,you say, they can’t do this to me. I filed for bankruptcy!
Unfortunately, you’re incorrect. If you fall behind on the mortgage after bankruptcy the lender can - and will - foreclose on the house. Unless you’ve reaffirmed the debt during your bankruptcy, they can’t seek a deficiency judgment against you if the house doesn’t sell for enough money to cover the mortgage. That’s the difference.
A foreclosure action is a lawsuit to recover property, not to enforce a money judgment. For the most part, a mortgage remains intact after a bankruptcy case. That means the mortgage company can foreclose even after the case is finished.
But remember that the mortgage company cannot seek a deficiency judgment against you through the foreclosure. That’s why it’s important for you to have a lawyer carefully review the foreclosure papers to make sure they aren’t also suing you for a deficiency. If they are, it’s against the bankruptcy laws and considered a violation of the discharge injunction.
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