Dealing with a Mortgage After Chapter 7 When You Don’t Reaffirm the Loan Skip to main content

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Dealing with a Mortgage After Chapter 7 When You Don’t Reaffirm the Loan



Mortgages can survive Chapter 7 bankruptcy

Image Source: Flickr User American Advisors Group

If you are current on your mortgage payments and file Chapter 7 bankruptcy, you may have been advised by your attorney not to reaffirm your mortgage during the process – or your lender may have refused to reaffirm. Mortgage lenders typically prefer you to reaffirm the debt because it gives them more leverage and options. Often, though, it’s better for you not to reaffirm to give you more options. However, one of the downsides to not affirming is that mortgage companies will usually not report your post-bankruptcy mortgage payments to the three credit bureaus.

But you can – and should – self-report to improve your credit rating, demonstrate your current on your loan, and protect yourself from predatory actions by lenders such as unlawful foreclosure. The mortgage lender is not breaking any laws by not reporting payments on an un-reaffirmed mortgage. However, they would be in the wrong to dispute your requesting the bureau update based on your accurate self-reporting of payments. Here’s how to take care of this to protect yourself and your credit by self-reporting to TransUnion, Experian, and Equifax.

#1 Always pay via check or online transfer

Your lender may cut off the ability to make online mortgage payments after a Chapter 7 bankruptcy. If they do not, making payments this way should be okay but be sure to print and also save electronically, a confirmation of the electronic payment. Lenders will usually also not update your online account information and may cut off access to this. Checks may be your best option. Avoid using money orders since you can’t prove the money order was cashed. If you can’t get a checking account, a prepaid service like American Express Blue Bird provides paper checks on request you can use to pay bills. Be sure to pay on time and then keep a copy of the canceled check showing the lender processed the check.

#2 Request a payment history from the lender

Once per year, your lender must provide you with a payment history free of charge. If the fees are reasonable, you may want to pay for additional reports, so you have one for each six months of the year or one per quarter. This is necessary to substantiate your self-reporting, and the mortgage lender cannot withhold this. It must show the payments you submitted. Once you get the report, compare it to your payment records. If there are any inaccuracies, such as the lender showing a payment posted later than you see they deposited the check, request that they correct the payment history and send you a corrected copy. For best results, this should be done prior to self-reporting to the bureaus.

#3 Request current copies of your credit report from each bureau

You can get one free copy each year but if you want to self-report quarterly or twice per year, you’ll need to pay for additional copies. The fees aren’t outrageous. This is the basis for your dispute. A dispute tells the credit bureau that you disagree with an entry on your credit file and are requesting that they correct it.

#4 File a dispute with each credit bureau

In order to get your mortgage payments added to your credit report, you must file a dispute with each bureau. Send to the complaint department of each credit bureau – address info can be found on their websites – and ask them to correct the information on your mortgage data. Circle the mortgage entry(s) on the credit report and state in the letter that are disputing the information about the circled item. Attach a copy of the credit report – hang on to the original.

State that this item is inaccurate because you have made timely payments on the mortgage and request that the item be updated to reflect your payments. Include copies of the payment history provided by the lender (after you ensure its accuracy) and say this supports your claim of inaccuracy. If the lender does not correct the payment history, also include copies of your canceled checks and indicate the inaccuracies on their payment history.

Ask them to investigate and correct it as soon as possible. Be sure your name, current address and mortgage account number on the header of the letter. After your signature, list the items you are enclosing. Do this for each credit bureau.

#5 Wait for the Bureau to Investigate

The credit bureau has 30 days to verify your assertions with the mortgage company. If the mortgage company doesn’t respond (and they may not if their payment history aligns with your assertions), the credit bureau has to take your information and use it to correct your credit report. Alternately, the mortgage company can voluntarily report the payments in response to your dispute. Either way, your report should be corrected.

#6 Repeat

This process should be repeated at a minimum, once per year. To get optimal results, consider updating quarterly or every six months so that your credit report and score will reflect your timely payments. This is also important if you want to refinance your loan at a later date or if your lender sells your loans, so you start out on the right foot with your new lender.

To find out more about how Chapter 7 can allow you to eradicate crushing debt without losing your home, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 for a free North Carolina bankruptcy consultation at one of our offices in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.

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