Chapter 7 Debtor Did Not Reaffirm Mortgage

Can you give us a little more background, please? It will help us answer your questions.

-Who told you the Chapter 7 would protect your house from foreclosure? Your attorney, or just someone you talked to?

Normally, only a Chapter 13 can stop a foreclosure from happening. In a Chapter 7, you either have to re-affirm the mortgage or surrender the property, unless your mortgage falls into the exemptions provided for by your state.

-Do you plan to reaffirm or are you just going to let the mortgage company foreclose?

I'm a little confused about your statement "I included my house in my bankruptcy" - yet later you talk about reaffirming the mortgage. Unfortunately, you can't do both - you either included the house in the bankruptcy, or you reaffirmed the mortgage. Can you shed a little more light on this?

The fact that you're saying you were told NOT to reaffirm in case you have to give the house back to the mortgage company makes me think that you may have surrendered the property in the bankruptcy - do you know if this is the case?

I hope your attorney has not misinformed you.

Please give us a little more info, and we'll be able to help you.

I am not even suggesting that I know anything about this subject but this is what happened in our bk 7 situation. I think because we owed more on our home at the time we filed that the mortgage co., didn't even bother having us sign a reaffirmation agreement, we are still living in our home and that was 5 years ago, however we were able to refinance it two years after bk.

I am with sue...I hope that your attorney didn't mislead you in anyway.

Would you mind giving me your email address so I can go further into detail

You can Private Message through the site - Just click on the PM button under the person's post you want to talk to.

Sorry about that, I didn't see your message here on the site until just now. Please feel free to PM me if you have further questions.

Here's what happened with us. Our lawyer included our HELOC in the bankruptcy stating that, yes it is discharged, BUT the loan co more than likely will NOT forclose on the property as long as we are still making the payments. This is because (1) the property is worth less than the first mortgage and if they forclose it would only pay off the 1st & they would loose a boat-load of $$. (2) the bank on the HELOC still accepts the payment. Our lawyer said that doing this is a protection for us if we lose our jobs & cannot pay. We wouldn't be liable for the HELOC.
BTW, we are in CA.

Hope this helps and I made myself clear!

we filled chapter 13 to keep house and car then our attorney suggested after 4yrs to convert to a 7 but he did not tell us to reaffirm our mortgage our ask us what we wanted to do when speciffically told him before we filled a 7 we want to keep our house other wise we did not want to do it can we sue him

I am going to file ch 7 after a divorce- should I file on debts and
a mortgage that was ordered paid by the former spouse which my
name was originally on?

We just started the Ch 7 process. We are "current" on our payments on both our primary mortgage and HELOC. Our attorney said NOT to reaffirm either of them. They "will" get discharged per the bankruptcy.. but as long as we keep making the payments on both the mortgage and HELOC, those banks are happy (you get to keep living there). Also, like mom2_3kiddos said above, my attorney said it's actual protection (to not reaffirm) in case in the future you start failing to make the mortgage payments.. then you can just walk away.

Apparently, when you reaffirm you are somewhat signing a (another?) legal agreement to keep paying.. and you can get into more trouble later if you start failing to make your mortgage payments.

I still don't get it 100%, but I'm just listening to what my lawyer is advising me... I hope he isn't screwing me. LoL

i will be converting from 13 to a 7 soon , my attorney told that we couldn't discharge the car and house in a ch7 it is for unsecured debt only. so we have to reaffirm the house and car. which means we would have to make the payments .we were going to dismiss it all before we thought about converting it. is it better to convert than to dismiss a bankruptcy?

my bankruptcy was discharged march 2008 and my lawyer told me not to reaffirm because it did not matter if i did not file the mortgage in the bankruptcy if did not have to reaffirm after i pulled a credit report i found out that my mortgage had been discharged in my bankruptcy and that the mortgage company was not reporting my payments to the credit bureau anymore. i would like to know what does this mean and am i still a homeowner

can someone please answer the question about not reaffirming my loan after bankruptcy chapter 7. do i still own my home if i dont reaffirm. i cannot get a straight answer from the bank or attorneys i have contacted. does anyone out there know the law.

I just filed a chapter 7, and I would like to reaffirm on my house if my bak can lower my payment to where I can better afford it, but it's been weeks and everytime I follow up with the bank about my remodification application they say it's being reviewed, so my question is - if I don't reaffirm can my bank still help remodify my loan, or will another bank be willing or able to help refinance me? I am current with my payments and I payed extra on the principle for the first 4 yrs until my income was cut due to the economy. Is there any hope for a bank to still help me if I don't sign the reaffirmation agreement?

I don't know the law but I have went through the same thing as you I included my house in chapter 7 I was a year behind after losing my job. The bank set up a repayment plan so I could catch up what I was behind. And I haven't reaffirmed my mortgage either incase something happens and I can't afford it I'm protected. So if the bank is willing to work with you and as long as you make your payments you are the home owner.

Yes they are willing to work with you even though you don't reaffirm the loan or atleast mine did but I ended up having to do a repayment plan because my income was to high for a modification. As far as another bank refinancing is very doubtful with you just now filing Chapter 7

I am about to file a 7 and I want to reaffirm my mortgage. I do NOT want to lose my house. There is maybe $20,000 in equity but I expect that to improve in the next few years. Two years ago I had $250,000. in equity.

My lawyer told me not to reaffirm but this seems to leave me vulnerable to foreclosure if I am even 1 day late on my mortgage.

I modified my loan this year with BOA and I finally havean affordable payment I can live with. Now it's time to address the credit card debt, around 55000.

I pass the means test for the 7 but the house has me so worried. I feel like if I cant reaffirm I will lose my house when property values come back up and the bank can make a profit.

Any thoughts would be appreciated.

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Thanks Debt, that's what I thought. I found a new lawyer in my town who I love. When I asked him about this he said right away we would reaffirm. I think that other guy wanted to do less work.

I really appreciate your help!

"The legality of it is this: The filing of a bankruptcy proceedings is automatically considered a "default" under the terms of your mortgage note."

Just where are you getting this?

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Not in mine it isn't!

what state are you in jesse2?

MA - Freddie Mac standard mortgage form 3022 which is specific to MA
Does have stuff about rights to correct any deficiency in the security in a BK or other situatiion, which might mean must reaffirm, just not spelled out - my lawyer said MA law prohibits acceleration

okay that explains alot.i would go with what the attorney advised in your case.

Paul, thanks - but I have nonetheless asked him for the relevant MA law chapter as I don't want to leave something so important to a verbal OK .

oh yeah,i hear you.in fact i would basically ask to see it in person before commiting.things like this vary state to state.it's best to know now before you are unpleasantly suprised later.

Not to contradict your attorney, and I'm definitely not familiar with MA laws -- but to say that a loan cannot be accelerated would mean that if you defaulted in payments, then the lender would have to wait 30 years (or however long your contract was for) until every payment came due before they could sue for the balance...... (or else they'd have to file separate suits in small increments as the payments came due, which doesn't make any sense).

There has to be something more to the laws than that, I'd think.

Articles 19 & 22 of your Mortgage ("Borrower's Right to Reinstate After Acceleration" // "Acceleration; Remedies") refers to the acceleration.

Keep in mind your mortgage is just a way of perfecting a lien on the property. The actual promissory note (which is incorporated by virtue of the definitions (D) and (F)) creates your obligation to pay. Refer to your promissory note, which will also have requirements and the default/acceleration clause.

Mom

Who is your mortgage company. I am about to file a 7 but dont want to lose my house, I have Contrywide/BOA

I checked with my atty who has been doing BK work for many years and he says in MA the only way lender can accelerate is when there is monetary default.

Yeah, sorry, realized what I posted before had as an implication that you are current with your mortgage payment - then they cannot accelerate or foreclose - otherwise they can.
So it is a case of the fine print, as my atty calls it, in the mortgage note being trumped by state law.

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.

:confused: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

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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

i filed chapter 7 and if i get discharged and stay in my home without raffirming both mortgages and i am up to date on all payments can the 1st or 2nd foreclose anytime they want even if i am current on all payments ? in state of florida or demand an acceleration of payment ? please help me answer this thanks its driving me nuts

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so in a nutshell, if i am planning on making the payments after my BK, i should reaffirm my mortgage and nothing more will ever come of it unless i stop making the payments. in turn it will also continue to help my credit correct?

also we have no plans to stay in this house more than 5-6 more years.