In a Chapter 7 bankruptcy, you can discharge your mortgage debt just like you discharge your credit card debt. To discharge your mortgage debt, all you have to do is nothing. In other words, simply by not signing a reaffirmation agreement, you discharged your mortgage debt.
Setting aside the separate discussions of whether a lien still remains on your house even though you discharged the debt, and whether you need to reaffirm your mortgage to stay in your house, it is well established that the discharge of your mortgage debt means you are no longer legally liable to pay it.
So if you are no longer legally obligated to pay your mortgage debt, why did the lender send you a collection letter after you got your discharge, and does this violate your discharge order?
The answer is probably “no, it does not violate your discharge order,” and here is why. The letter most likely has language similar to this:
“Please be aware that if you are currently in or have been discharged in bankruptcy, this letter is not an attempt to collect a debt. Moreover, in the event you are in or have been discharged in bankruptcy, this letter is not an attempt to foreclose on the real estate lien which still may encumber your home. This correspondence is solely for informational purposes and is intended to provide you with a notification of the above referred transfer of collection, processing, and reporting duties. Due to your bankruptcy, you will not receive monthly billing statements unless we receive a written request from you.”
I realize this may be confusing, particularly if you also see a “principal balance” on the letter with an amount. However, as the letter states, this is not an attempt to collect a debt. As mentioned above, a lien still remains on your house most likely, and therefore this letter is more or less an attempt to establish what the remaining balance is on your lien.
Peter Bricks is a Woodstock personal injury and bankruptcy attorney in the metro Atlanta area, who files cases in the Magistrate Court of Cherokee County.