Chapter 7 Debtor Did Not Reaffirm Mortgage

we also did not reaffirm on our house.next year our mortgage is going up.we will not be able to afford it.should we try to talk to the mortgage company and see if it is possible to get a lower payment,or foreclose and move on

My lawyer did not get a reaffirmation paper work from my mortgage company while I was going through Chapter 7 Bankruptcy. I didn't know anything about reaffirmation until I sent for a Credit Report and it doesn't show I have been making regular house payments.

The Mortgage Co. says there is nothing I can do even though I understand it is up to the Mortgage Co. to send the reaffirmation once they have received notice of bankruptcy.

What can I do to get my home affirmed?

Hi we filed bankruptcy in 2005,and claimed our home exempt, everything went fine, or so we thought we just applied to get another mortgage and were told that our attorney did not send an affirmation letter to the mortgage company and thus we the mortgage which we paid and satified in ful is showing as included oin bankruptcy on our credit reports. Even though we have a satified deed statement etc.. to prove this. The lenders are saying that it must be removed from the credit reports, the big three, Experian, Transunion and Equifax are stating that they cannot do that unless we produce a affirmation letter dated prior to the discharge from the bankruptcy. we can find rhe attorney we used, it seems as she dissapeared. PLease advise!

While the filing of a chapter 7 bankruptcy forestalls foreclosures, the duration is through and until your case is ultimately discharged. If after discharge you fall behind on your mortgage payments, the bank does have the right to foreclose on the home.

It is important to note that while the bank may still foreclose, as you did not reaffirm the mortgage, the bank may not collect, from you, any monies associated with the foreclosure.

While the filing of a chapter 7 bankruptcy forestalls foreclosures, the duration is through and until your case is ultimately discharged. If after discharge you fall behind on your mortgage payments, the bank does have the right to foreclose on the home. It is important to note that while the bank may still foreclose, as you did not reaffirm the mortgage, the bank may not collect, from you, any monies associated with the foreclosure. As always, it is best to contact a bankruptcy attorney in your area.

I did a chapter 7 on my own. I didn't put my houses in the chapter 7 but papers where sent telling them I did a chapter 7. My houses note payment was set up to come out Ach and it never stop. When I sent the mortgage company my information stating that the bankrucpty was discharged and closed. That's when I called the courthouse and told them that I wanted to reaffirm my home and I did have it listed on my bankruptcy to reaffirm. They told me after it was closed that I could have printed out the papers to have it reaffirmed since I did list it to do so. But now I have to pay $260.00 for them to open my cases over again to have a judge sign a paper reaffirming my house. I could have done it if I would have know befor the cases was closed.

I just ran into this and filed my bankruptcy in 2003. Chapter 7. I did not include the house and never heard anything about reaffirming until my mortgage statements started havig ominous statements about bankruptcy and "not a demand for payment". I called Chase--I've had many different companies--never had a problem till now.

It's listed as being under the bankruptcy on my credit record.

Chase told me to call the lawyer to reaffirm.

I'm hoping this protects me and clear my credit record. The lawyer is no longer with the firm but the person handling her files will call me Monday.

Also--it was a VA loan. Does that make any difference?

There is alot of Mis-information or partial information in this thread. First of all, you don't get to pick and choose which debts are included in Chap 7. If you have a note on your house it was "included" in Chap 7. all of your debts must be inculed by law. Then you can re-affirm some of them if you choose. When you file you have to select the option you "intend" to do a) re-affirm, b) redeem, c) surrender. After your 341 hearing you can get with your lender and complete a re-affirmation agreement and file it with the court. It has to be filed before the case is discharged.

Re-affirmation is not automatic.

First the bank must also agree to the re-affirmation. (currently BOA and Wells Fargo no longer do re-affirmations). It is a new agreement and the court cannot require the bank to sign it.

Second, it has to be approved by the judge. If he/she doesn't think you are financially stable enough to handle the debt, the judge can refuse to accept it. In some districts the judges do not accept re-affirmations at all. Some districts don't require it to go before the judge if your attorney files an affidavit that you are finacially sound enough to handle the debt. Some attorneys will refuse to sign them all together because they don't want any potential liability regarding the re-affirmation.

The 2005 Bankruptcy law did only allow for the three options but they did not consider/ignored the fact, that the bank (or other party) must also agree to the re-aff.

The middle district of Florida is the only one that I know of that strictly interpits the law to say you have to re-affirm if you want to keep the property. This is based on a ruling in October 2009. This was before BOA and WF decided to no longer do re-aff's. It was a decision based on very specific circumstances, that the judge then turned around and said applied to all potential re-aff's. I think it will be overturned. Even if yo don't sign one in this district and you "Surrender" by default of not signing. You can still continue to make payments and stay in the house.

Now that we have laid out the various rules. You then have to decide to re-affirm or not re-affirm. Even though you chose the selection "Intent to re-affirm" when you filed your chap 7. The law does allows you to change your mind. It even specifically allows you to recind the re-aff up until discharge or 60 days after you filed the re-aff. so you can legally recind it after discharge (as long as the 60 days haven't expired).

If you are upside down on the house I can think of no good reason to sign one. The bank has to follow the same state foreclosure laws to foreclose as they would if you had not filed BK. They are the same after BK whether or not you affirmed or did not affirm.

So if you get behind on your payments (even if you don't re-affirm) all of the notices and court filings and court sales have to be made just as if you re-affirmed. Most of those state laws allow you to bring the note current up until the foreclosure sale.

So I can't follow the logic stated earlier in this post that you are better of having signed a re-aff if you were to get in financial trouble later. It doesn't make sense! If you signed the re-aff and a year later lose your job and quit making payments. Then the bank is going to foreclose regardless of whether or not you signed the re-aff. The difference is if you did sign the re-aff they will sue you for the deficiency and get a judgement against you. this judgement can't be discharged, because you can't file Bankruptcy again for 7 years (after your previous filing).

But in that same situation, if you had not re-affirmed, you just walk away and the bank will foreclose but you have no liability for the debt.

The reason banks won't foreclose if you stay current is becasue they have no incentive. They continue to make money off of the interest that you pay every month. If they foreclosed they would have to pay attorney fees and then hope to sell the house for enough to re-coup their loan plus cover the attorney and court fees. Then loan the money out again to get the same interest (give or take) that they were receiving from you already.

To the poster who referred to the contract language in the promissary notes regarding bankruptcy and demand of payment. That line is always followed by "In accordance with applicable state laws". Alot of states will not allow foreclosure or demand of payment if you are current on your payments.

Now suppose it is five years later and you have built up equity in the property. You can sell the house just as if you had re-affirmed it. You have to pay off the loan and you get to keep the rest. and then get a clear title.

If you had built up equity and then were unable to make the payment the bank would foreclose, but they would have to give you the proceeds in excess of what the outstanding balance was on the note.

We just filed Chapter 7 in GA. We haven't received any reaffirmation letters from the 2 mortgage companies. We owe $330 on a house worth $250. We just modified the first at 2% for 5 years. Our second is at 12% and never wanted to talk modification. Is it possible to stay in the house 5 years, reaffirm the first, not the second, and hope to be able to pay off the first by selling the property at the end of the 5 years? What happens to non-reaffirmed 2nd if they don't receive anything from the sale? Does this further hurt our credit?

Debtloaded, you got it - great post

Sorry not debtloaded, I mean BCA -that is a great post

Thank you, I have done alot of research on thew subject.

Susan in Geargia - You can re-affirm the first and not the second if you choose. If you walked away, the first would have to get paid first and the second would get whatever was left. The second would have no recourse against you.


If you just want to stay there for 5 years you should be fine re-affirming the first and not the second if the first is not under water. Although I see no reason to do so unless it just gives you peace of mind.

You won't be able to sell it without permisson from the second, basically a short sell, because the second still has a lien on the property. You could walk away and the first would get the proceeds from the sale at foreclosure and the second would get what ever was left over. If you had re-affirmed the first and for whatever reason it was underwater, you would be liable for the reamiang balance on the first. That is why I see no benefit in re-affirming the first. What id the market goes down even more and it becomes underwater?

But you will never be able to sell the property unless there is enough equity to pay off both loans or the banks agree to let you sell it for less tha what is owed to them (short sale).

BCA, how can I get a hold of you. I have a few questions and you seem to be best able to help.

My husband and I filed chapter 7 in 2009 we got our discharge papers in July of 2009 we never reaffirmed our HELOC. Our home is not worth what we owe. Our primary mortgage is at a different lender we are currently up to date with them. If we can't pay our second can they still foreclose and how would that work if we are current on our primary?

My mortgage company (WF) told me that the court papers did not show that I reaffirmed my mortgage before discharge in 2003.
They said you can only reaffirm during an active bankruptcy.
I have been making payments since then and refinanced in 2004.
They told me that even though I refinanced , It means nothing and that they will not report that I have been paying on the property, and that does not mean that I renewed a mortgage with them, and they still can take the property if I defaulted on payments.

When I was in the bankruptcies lawyers office I signed a “Chapter 7 Statement of intent ” which said I was keeping my property, and a “Schedule C-Property Claimed as Exempt” paper.

I can’t believe there is nothing I can do.

I know how you feel. Our laywer is doing nothing for our house, we are working with the Chase laywers and they want to go though ours but he said its not his job to work with houses in Ch 7.

So Chase won't work with us, our laywer said flat out its not his job to help us keep the house, he said let the bank have it but its not his home...we have animals and we cant lose it.

We are trying our best to do what we can but I wish we had a better laywer