I lost my house in 2008 can the bank or collect make you still paid on credit report it said charge off I do not understand what to do

Asked by Linita, California Fri Aug 5, 2011

Help the community by answering this question:

+ web reference
Web reference:


Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Fri Aug 5, 2011

It depends on how you lost your house (foreclosure vs short sale) and which position the loan was in (1st Trust Deed or Junior Trust Deed).

If you did a short sale, then whoever negotiated the short sale should have made sure that you were relieved from any liability for the deficiency in the payment. If they did not, and if you signed a short sale letter that stated the bank retains the right to pursue you for the deficiency, then guess what; they can come after you for payment.

If the property was lost to foreclosure, then usually (you will have check with an attorney, as there are some exceptions to the rule) the foreclosing bank can only take the house and they do not have a right to come after you for the balance owed. However, quite often, it is the lender in 1st position that forecloses.

Many people believe that "if the 1st forecloses, the 2nd loan is wiped out". I hear people say this all the time and it is WRONG. When the 1st forecloses, the 2nd lien is wiped out, in fact it wipes out all junior liens (i.e. trust deeds), but it does not wipe out the associated debt (i.e. note). When you took the loan you signed both a note (promise to pay) and a deed of trust (a pledge of your home as collateral if you do not keep your promise to pay). The trust deed is wiped out but not the promise to pay or note. The note just reverts to being unsecured, like your credit cards. And the lender can still sue you for payment of the debt, possibly get a judgment, and then attach your wages or your bank account or other assets you own.

Lastly, what we are seeing right now is collection companies buying the right to try and collect on old mortgage debt. Often, because the borrower does not know their rights, and because some of these companies use strong arm tactics, they can frighten you into paying something you don't owe. So if someone is coming after you for a debt on your prior home, you need to contact an attorney and figure out if you are still liable on the debt. Then take the appropriate action.

Hope this helps. Dare to Dream.

Shel-lee Davis, QSC®
Certified Distressed Property Expert – CDPE®
Short Sale & Foreclosure Resource – SFR®
Certified HAFA Specialist – CHS®
SSG Pro®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
424-2HELP12 (424-243-5712)
2 votes
Emily Knell, Agent, Huntington Beach, CA
Fri Aug 5, 2011
If you lost your home to a foreclosure sale, i.e. bank took it to auction or it later sold as an REO property, the foreclosure will stay on your credit for 7yrs-10yrs, it may come up saying "charge off".

If you had done a short sale, it would come up saying "paid as agreed" or "debt settled for less than agreed".

You can't just call up the credit bureau & say "Take it off my report".

As a renter, please click on my picture & read my blog post called "RED FLAGS - RENTAL SCAMS", in case you're looking for a rental, it will help you watch out for scammers.

562-430-3053 c
Realtor Since 1996
Main Street Realtors
1 vote
Dan, Home Buyer, Alabama
Fri Aug 5, 2011
Since you never contracted with a third party debt collector then you never have to pay them. Lookup cease and desist letters for debt collectors.
0 votes
John Juarez, Agent, Fremont, CA
Fri Aug 5, 2011
Charge off is a bookkeeping term . The debt remains unpaid. Is someone trying to collect from you?
0 votes
Search Advice
Ask our community a question
Foreclosure in Compton Zip Codes

Email me when…

Learn more