Generally, when a debtor files a bankruptcy, notifies the mortgage lender of the bankruptcy, and does not sign a reaffirmation agreement with the mortgage lender, then the debtor is discharged from any personal liability for the mortgage loan. However, the real estate is still subject to the mortgage loan security interest.
A reaffirmation agreement is an agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as a mortgage loan) after the bankruptcy, usually for the purpose of keeping collateral (i.e. the house) that would otherwise be subject to foreclosure.
If a creditor seeks payment from a chapter 7 debtor after the debt was discharged, then the creditor may be in violation of the discharge injunction, and could be subject to sanctions and penalties.
References
http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspx
http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspx
http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Glossary.aspx
Answered on Dec 23rd, 2014 at 8:08 AM