What happens with foreclosure proceedings after a chapter 7?

We filed a chapter 7 in 2008, and did not reaffirm on the house without realizing it. We had been paying our mortgage on time and had it on the market, but we had to mve out of state. We can't sell it, but just got a summons saying we are being sued for court costs and such by the bank. What can we do? Are we liable though house was not reaffirmed?