October 22, 2014

Chapter 7 Debtor Did Not Reaffirm Mortgage – Is Her Home Now at Risk?

I have a few questions and I’m not sure how to get them answered so I decided to write to you after seeing your website. I really need some advice or guidelines and would appreciate your help. Please let me know your rates and I’ll be more than happy to pay as I need these answers for peace of mind.

My Chapter 7 bankruptcy was discharged in September, 2006 in Atlanta. At that time, my attorneys told me to stop checking the internet for information because it would just worry me and to leave it to them. The bottom line here is that I wanted to reaffirm my mortgage and stated this at the 341 hearing. I didn’t realize you had to actually sign an agreement for this to happen. I called my attorneys after I realized what should have happened and they told me they never think it is in the best interest to sign a reaffirmation on a home because the mortgage company will never come after it anyway if the loan is kept current. I’ve never been late with a payment. They acted like I was crazy to even worry about these things and reminded me that they told me to stop reading about it on the internet.

Since then I have always received a bill from my mortgage company (my house is an FHA loan-I don’t know if that has any bearing on any of this) that has a disclaimer stating the bill is being sent for informational purposes only and is not an attempt to collect, etc. It is also on my credit report as discharged.

My questions are as follows:

1) Will they ever come after it even if I remain current? Could they wait years until there’s equity in the home and then foreclose?

2) I’ve read that there are some ares of the country where keeping the house without a reaffirmation agreement has been protected by the Federal Court. Is this true, and if it is, is Northern Georgia one of those courts?

3) I just got married and will be changing my name. I’m afraid to even change it with them because I don’t even like to flag my situation, am I crazy?
Also, I wanted to Quit Claim half of it to my husband but this would really be flagging it- am I right to worry about that?
Should I even consider doing that?

Thank you for your time,

Julia

Jonathan Ginsberg responds:  Julia, here is how I would analyze your situation. Bankruptcy Code Section 521 is entitled “Debtor’s Duties” and includes a requirement that you as the debtor must file a statement of intention with regard to property you wish to retain or surrender. Section 521(a)(6) provides that a Chapter 7 debtor must actually enter a reaffirmation agreement for a personal property secured creditor.

The Code is silent regarding a real property secured creditor.

By not reaffirming your home mortgage, I believe you could make an argument that you no longer have personal liability under that loan. Given that the mortgage company is sending you bills “for informational purposes only” it would appear that they recognize the discharge of personal liability as well.

I believe that they would still have a lien against the property – just not against you personally. This means, in theory, that if the house burned down and there was no insurance, they could not come after you personally.

Because you no longer have personal responsibility for paying this debt, your credit report will not reflect the benefit of regular payment.

I know several lawyers who regularly counsel their clients not to enter into residential reaffirmation agreements for the express purpose of eliminating personal liability. Personally, I think that the credit restoration benefits outweigh the risk of personal liability on a mortgage.

I think that the mortgage company would have a hard time trying to foreclose against you, say, 10 years from now based on a failure to reaffirm. There is a doctrine in law called “laches” which says that a party cannot sit on its rights for an extended period of time, then choose to exercise those rights later on. Here, it would hardly seem equitable for a mortgage company to do so. I think it is very unlikely that this would happen.

However, laches is a doctrine of equity and the last place you want to be is in court, paying a lawyer to argue on the basis of equity. At best you would be out several thousand dollars in legal fees and at worst, you lose.

I can’t really tell you what would happen if you tried to refinance or quitclaim. This uncertainty factor is why I prefer to reaffirm. You might want to look at trying to refinance for the purpose of getting your mortgage situation back to “normal.” Or, you could take your chances with a name change or quitclaim to your husband – as long as you are current with the payments, I think it is very unlikely that you would have any problem. I would at least talk to a mortgage broker first, just in case you had to move quickly to refinance.

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Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.
About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

Comments

  1. I used to work at a company that lent money for real property purchases, and I can tell you, we were happy as long as the debtor kept paying on the loan. We knew we couldn’t force anyone to sign a reaffirmation agreement, so as long as they had checked “will reaffirm” on their Statement of Intention, and were still making regular payments, that was good enough for us.

  2. jeff-Michigan says:

    This is very similar to my story. We built a new home. Had a high appraisal value, at end of loan, lost all equity. Forcing us into bankruptcy/forclosure on the new house. WE wanted to reaffirm the old house, through error was included in bankruptcy. Now we will lose the new home, and whats up on the old home. On credit the debt is wiped out. Can ? I get some payment history for the payments. Also, I was told that I might call the mortgage company, and see about renegotion of the loan cost/rate/ terms? Do you suggest this?
    If I stay at the old home without a reaffirm, and in 2 years when my credit starts to recoup, if I walk away will a new hit come on me, when they proceed with foreclosure, or has my current bankruptcy protected me from all this. In 2 years I think there will be many more homes, better than my old house.

  3. Pola Lewis says:

    question
    My chapter 7 was discharged 6/20/08 we didn’t reaffirm on our mortgage. The mortgage company is now raising our mortgage $600. So we are not willing to pay. What are our options?
    Pola-Michigan

  4. Pilgrim Girl says:

    Hi Jonathan:
    I recently called my mortgage lender to request a reduction in my mortgage interest rate. My bankruptcy was final about 1.5 years ago. My mortgage was not made part of the bankruptcy, it was always my intention to pay it. They said they couldn’t help because the mortgage was not reaffirmed. Is this something I should do in order to lower the rates or go elsewhere to try and refinance. That option, however, would have to wait until Sept. 2009 and I would like to get it lowered now. I am current on my mortgage and that is the first bill that gets paid every month.
    Thank you, kindly.

  5. Wendy Arnold says:

    I am going through the exact same thing, I am trying to build my credit, I want to stay in the home but the mortgage company said they will never post it as “on time” with the agencies, they told me they were not even sure I could get title after 28 years, i need help . I want to keep my house, i have never been late but i also want my credit to start to be repaired. Any suggestions?

  6. @Wendy, what do you mean “they will never post it as “on time.” Are they posting as late? Why wouldn’t you get title? That does not make any sense to me. Please send me details directly – this does not smell right.

  7. Hi I thought I was off the mortage when I went through my divorce he was rewarded the house. And now I have allready finish my bankrupty I have done a chapter 7 am I still responable.

  8. Hi Jonathan,

    I discharged a Ch. 7 BK in March, 2008. We stated on our Statement of Intention that we intended to reaffirm the mortgage, and we also stated this at our hearing. I didn’t realize that we had to do anything beyond this and assumed it was reaffirmed. Then today I pulled my credit for the first time to see where we are a year later, and the mortgage does not show up. I called the company and they said it was never reaffirmed. The company we stated an intention to reaffirm with has since sold the mortgage so we are paying a different company. We have never been late, and I would like to show that we have been paying this $1750 every month since the BK on time, as this will help increase our credit score and make it more likely to get approval for the car loan we are currently seeking. My questions are:

    1. can we reaffirm now, a year after discharge?

    2. Would I just do this with the lender or do I have to re-open the bankruptcy somehow?

    3. Would I reaffirm with the current lender or the original one?

    I did my own bankruptcy and all went well — except apparently this! I appreciate any comments you can make.

    Thanks,

    Susan

  9. I filled for ch 7 and i would like to reaffirm my mortgage but as of next year my mortgage rate may change (i have a arm loan now and it’s due to expire)and i don’t know how that may impact my payments. I also applied for a loan modification a few months ago but because of my bankruptcy everything has been put on hold. i would like to keep my house but how can i decide that if i don’t know what my payments may be.

  10. james carlson says:

    I was discharge last year in apirl, i was going through a loan modifcation, i sign the paper and sent them in, they told my lawyer they have send the final approval back, they never did, we called every week and they to my lawyer that they don’t no what is going, then they had too what for the bankrupcy code to come of and it never did. then i call my second mortgage company and ask for my statemant, he told me they cannot send me any statement or call me, the district court will go after them, if that is true why is bank of america violating the rules, that is againest the law. thanks james

  11. Hi,
    I was discharged last Dec (2009) chapter 7. Now I just started receiving the “voluntary” statements from my mortgage company. I was not aware that i could walk away from the mortgage, as I checked my credit report and their is NO record of this mortgage that I have been paying on for 15 years. :-(
    My attorney did tell me about a re-affirmation agreement but I never got one from the mortgage company, never signed on. Have been making on time payments since bankruptcy (actually for entire loan,e 15 years)

    My question is how exactly does one walk away? I mean, do I just up and pack and leave, or do I contact the mortgager and tell them I plan to walk away? Will the ensuing foreclosure go on my credit report? I need to walk away because I can not afford the repairs that are going to be needed and can not sell it for what I owe.

    Thank you

  12. Hi,
    My bankruptcy was discharged 5 months ago. BAC would not reaffirm an agreement.
    Can I walk away and go buy another house?
    When I called during the br to reaffirm, it was a flat NO THAT the house was included.
    Did my bankruptcy myself. If I can walk , I want to walk.
    thanks.

  13. Denise, my thought is that if you did not reaffirm your personal liability to pay the mortgage has been discharged. If the mortgage company takes a different position, see if they will put it in writing.

  14. I filed chapter 7 bk on 04/13/2011 by myself in AZ. I am a joint borrower on a house. I spoke to BB&T today to let them know that I was going to keep the house. I have never been late and will continue to make pmts. They told me that my mortgage acct is in their Bankruptcy dept. and hat I could do a reaffirmation and they will send me options on this.
    My questions have to do with the other joint borrower. The other joint borrower on the mortgage account is NOT filing for bankruptcy. How is having the mortgage acct. in the BK dept because of MY filing, going to affect the joint borrower? Can I do a reaffirmation on the mortgage loan even though I am the ONLY borrower that is filing? I know that if I do a reaffirmation, the judge has to approve it, are they going to require documentation from the other mortgage acct. borrower to do this?

  15. Sue, you should probably speak to a Ch. 7 lawyer in your district to ask about the customs and procedures in your court. Generally, if you reaffirm a debt, you need only show that you have enough disposable income to pay for the mortgage obligation. In other words, your Schedule I/J budget should not show a negative monthly income. Where I practice (Atlanta), the Bankruptcy Judge is not going to ask for a non-filing party’s financials. Your joint borrower’s credit report will show that the mortgage account was involved in a bankruptcy but that should not appear as a negative on that person’s credit. As long as the payments are being made, you should not have too many issues. Again, however, it would be wise to speak to a bankruptcy lawyer about your reaffirmation options.

  16. Thank you for your answer Jonathan. I will speak to a lawyer soon to get more info. I am thinking that I will not sign a reaffirmation. The current mortgage loan is a 30 year fixed FHA loan and the rate is 5.5. The joint borrower and I love this house and will continue to live here and pay for it, on time. Can I ask you something else? Could the mortgage company still try to do something as far as –foreclosure or anything like that —-because of my BK filing and if I don’t reaffirm? Does the joint borrower (in this case) run any risk like that?

  17. @Jonathan: Going back to Susan’s question in May of 2009. Can you go back to your attorney to reaffirm if it was not or does a new bankruptcy have to be done? It would be nice if they can just correct it but I’m sure it is not that easy. I let them know I wanted to keep the house and the car. I went through my paperwork and found a “reaffirmation” on the car where we signed stated we agreed with the terms but nothing on the mortgage. I called the attorney’s office and they stated that the attorney thinks it is not nessessary to reaffirm and just to continue paying. Seems to be a common think attorney’s nationwide agree with. I personally would rather have it in my name and on my credit if I am paying that large mortgage every month (would like something for it)! Just wondering what the process is to get it “officially” reaffirmed? Thanks, Darren

  18. Darren, once the Chapter 7 is closed, you would have to file a motion to reopen the case for the purpose of entering a reaffirmation agreement. Some judges will reopen for something like this but I suspect that other judges would not agree to reopen a case simply to put a reaffirmation on the record. There is also some risk in reopening a case – in theory, the Chapter 7 trustee would have the right to take another look at your budget and assets and you could find yourself facing off against a trustee who now has an active bankruptcy estate with new assets to be administered. In other words, reopening a case could open a can of worms.
    Ultimately the simplest solution would be to refinance, and thus assume personal liability so that the mortgage payments will be reported again on your credit.

  19. BENITA GRAHAM says:

    I filed Chapt13 in 2008 which was converted to chapt 7, due to me loosing my job. I have been discharged since Dec-2009. I recently pulled my credit reprot and found out that my mortgages payments have not been reported to credit bureaus. I sent inquiry to my mortgage company who sent me back a letter stating that payments which have all been made on time will not be reported until I reaffirm my mortgage. My bankruptcy attorney told me none of this. I am not sure what to do at this point. I am terrible upside down with my mortgage with all the forclosures in my subdivision.

  20. @Benita: when you converted to Chapter 7, you were discharged from all personal liability arising from unsecured and secured debts. In the case of your mortgage, the lender retains its lien against your property but you have no personal liability. This most likely means that you can walk away from your house and mortgage without the threat of a deficiency claim. At the same time, because you have no personal liability, your on-going payments will not be reported to the credit bureaus. Given that you are upside down, you can consider (1) turning the keys back over to the lender and moving; (2) negotiate a reduced balance and lower monthly payment with the lender in exchange for reassuming personal liability. In theory, you could file a motion to reopen your Ch. 7 to file a reaffirmation but given the reduced value of the property that does not appear to make a lot of sense.

  21. Richard Smith says:

    I was discharged for a chapter 7 in Jan of 2009 and the judge wouldn’t reaffirm my home loan. My wife recently left me and is now getting $300 a week from me, my home loan is $1600 a month something I cant now afford. My question is how long do I have before they come put a lock on my door? I’m now 3 days past the 1st the 15th is when they consider me late, i’m sure it varies but is there an approximation timeline?

  22. Rondelle says:

    My husband & I filed chapter 13 in 2003. It was discharged in 2008. We notified our mortgage company that we had completed the bk and thought everything was fine. In 2009 my husband was diagnosed with cancer, and we attempted to have our mortgage refinanced because my husband was laid off and we couldn’t afford the payments. the mortgage lender ignored our repeated requests and we started working with NACA, but still no response. My husband passed away in 2010, and at a NACA convention that year I was told by my lender that the investor of our loan (JP Morgan Chase) did not allow any changes to my loan for the life of the loan! So I am stuck unable to pay. However, since the bk, all we receive are informational statements. No calls. I also found out that we did not reaffirm our mortgage after the bk discharge. What is going on? Is it true that our mortgage company won’t come after me, or foreclose on the house? Any options. I was told not to make any payments (I can’t afford to), but to not leave the house. That it would probably be a long time before any action from mortgage company. No payments for over 2 years. Still haven’t heard anything from them. Feel guilty, but lucky to have somewhere to live

  23. If I want to sell my home that I did not reaffirm, and now have no liability for, can I do so and retain the equity or the net proceeds.

  24. @Kyle, by not reaffirming, your personal liability on the mortgage was extinguished. However, the lender retained a security interest in the property. I would argue that if you sell the home and pay off the mortgage lien, then you can retain the net proceeds. However, I can’t give legal advice on a blog so you should discuss this question with a real estate attorney in your area.

  25. @Richard – you don’t say where you live but I will assume that the lender has to go through a foreclosure procedure before it can evict you. Rules regarding foreclosures vary but I would think you have at least a few months before you would have to leave. Your bankruptcy attorney should be able to offer more specific advice about your situation.

  26. @Rondelle: you may want to talk to your bankruptcy lawyer. Reaffirmation is a Chapter 7 concept, not Chapter 13. Generally a Chapter 13 discharge will not eliminate your personal liability for a mortgage loan (where as a Chapter 7 discharge will eliminate your personal liability for a non-reaffirmed mortgage loan). It is very unusual for a bank to sit on a delinquent mortgage for 2 years – my guess is that they will reappear at some point.

  27. My husband and I just attended our creditors meeting this morning. At our initial meeting, we had asked the attorney about reaffirming our mortgage and were told that in Texas, the courts would not sign a reaffirmation and as long as we stayed current on our mortgage, we were ok. The trustee did not ask us about our intentions to continue paying our mortgage. Have you had any dealing with GMAC Mortgage and if the information we were given is correct?

  28. We were discharged from Chapter 7 in July of 2009. We did not reaffirm our mortgage but have done the whole “pay to stay” thing. We are coming on the 2 year mark and we are looking to buy a new home. Do we need to sell our home before we can get another mortgage for another since our current mortgage was discharged? We put our house on the market several months ago and decided to take it off after not much success. Are we responsible for our house or can we get a new mortgage and walk away from this one? We hadn’t realized that our payments would not be reported so we feel like we are wasting our money. We need to get into a bigger home anyway, so we are just wondering how this will all affect us.

  29. Johnathon, My husband and I filed a medical bankruptcy in AR in 2009. Up until May of 2009 our credit rating was 790+ each. The $2400 out of pocket RX expense per month forced us into bankruptcy, since we had to borrow some of the drug costs. We thought we had reaffirmed our mortgage, not realizing that we should have tried to reafirm through our mortgagor and not our attorney. Why don’t attorney’s tell their clients this? My understanding, though, is that Chase Mortgage never reaffirms anyone’s mortgage. Question: We have considerable equity in our home and can make the payments now, but if my husband dies I will be unable to make the monthly payments on my income alone. If the home is sold for more than is owed, will I be able to claim the profit or will the bank seize it?

  30. Michelle says:

    Hi;

    We filed Chapter 7 in 2009 and it was discharged in 2010. At the time we filed we included both the 1st and 2nd and put in our personal statement that we intended to keep the home and keep making payments. We have lost a job and must move for a new one and have found out we are upside down on the home. While our 1st mortgage began reporting it discharged on our credit immediatly and sent voluntary payment letters our second did nothing. Our new mortgage company asked for a letter from the second confirming that the loan was in BK, the second is telling us that we reaffirmed the loan simply by continuing to make the payment each month (but admitted there is no signed reaffirmation) and that we are legally liable for the debt. But our bankruptcy states that the 2nd was discharged, The actions of the second are now holding up our new mortgage by refusing to acknowledge it was included in the bankruptcy and discharged. Do I have any legal recourse to force them to show it is in BK. (The new mortgage company want to confirm the discharge and no legal liability from the actual lender) Please help because we are under a severe time crunch here. Thank You

  31. I filed Chapter 7 and did not reaffirm my loan. I loss my job just before the bankruptcy hearing two weeks ago, so now I’m unable to pay my mortgage. I did not make a payment in June, and don’t have no money for July. How soon will my house go into foreclosure since I already filed bankruptcy.

  32. we filed a chapter 7 in 2009. we attempted to a reaffirmation on our primary residence but did not. our bankyruptcy was finalized in 05/2009 .We applied for a loan mod since then ad was denied ,our lender offered us a ‘HAMP BACK UP MODIFICATION AGREEMENT’ “.our paymeny only went down by 20.00 dollars( we still have the sam lender) , we made 9 pymnts since then ,I pulled our credit report and it doesn’t show any of our payments .we are thinking of walking away from our home or seeing if our lender will do a short sale. Can the lende still come after us if we do walk away ? and will show foreclosure on our crdeit report?

  33. Hello – We recently filed bankruptcy chap 7 in the state of NJ. We were discharged this month. We did not sign our reaffirmation agreement with my current mortgage company. I do plan on staying in the house and pay my mortgage in full every month, but I did not want to lock myself into signing in case of something happening down the line. We have every intention of paying our mortgage and staying in our home. However, we would like to rebuild our credit and from what I have read, 5 years from now, my mortgage will not be counted as being paid. Is this correct? Any advice is appreciated.

  34. My bankruptcy was discharged in July 2007 and I didn’t sign the formal reaffirmation agreeement on a rental property. I wanted to keep the home then but now I do not as I can’t afford to keep up the payments. Of course the Attorney advised that we would be able to walk away from the mortgage at any time in the future. However now I’m really confused about being able to walk away and how this will affect my credit and the foreclosure procedures,etc. To date all payments have been made on time. The statements say for Informational purposes only. They had been reporting to the credit bureaus but I think they’ve stopped since I called last year. The lender’s BK dept said I could do a deed in lieu of Foreclosure, then they said or they would have to go through the entire forclosure process. Would that show as a current delinquency/forclosure on my credit report or would/should it go back to showing as a debt discharged as of july 2007

  35. This is a continuation from my previous question about the discharge in July 2007. I’m looking for options. Will the mortgage holder negotiate maybe a reduced payoff/payments/rate? The balance is approx $47,000.00 but with the condition of the property an appraisal would probably come in at half of that. Will they let me bring them a buyer. Bottom line is I’ve worked hard to rebuild my credit and I would like to protect it. If the easy answer is I can walk away and they should not be reporting because I did not truly reaffirm in the BK then I’m happy. Then I can stop making payments and if they report me as late I can show the bureaus and they will correct it, right? I have a friend interested in purchasing and fixing it up but how can they get it at a reduced price. Thanks

  36. JAVIER IBARRA says:

    HI, I RECENTLY FILED BK7 IN CA. DISCHARGED ON OCT 2010, ALWAYS I HAVE BEEN PAYING MY MORTGAGE ON TIME, QUESTION I WILL GET THE FORM 1098 FROM MY LENDER? FOR MY NEXT YEAR TAXES? OR I’M JUST PAYING FOR NOTHING. CAN I DO A SHORT SALE, STOP PAYING OR JUST WALK AWAY?

  37. Jen, I had mt chapter 7 discharged in NJ as of 5/2011 and did not reaffirm my mortgage. When I ran my credit report on 8/5/2011 I noticed the mortgage company was not reporting my good payments. I called my mortgage company and my lawyer to find out what was going on. I was told by both parties, since I didn’t reaffirm the mortgage loan it was included in my bankruptcy and the mortgage company will no longer report any payment history – being good or bad – because it is considered discharged under the bankruptcy laws. I know, it sucks but there are other ways I can re-build my credit quickly and at least I still have a roof over my head until I’m ready to refinance or even buy another home. Hope this helps. Good luck to you. @Jen:

  38. I have a 1st and 2nd mortgage which was discharged thru chptr 7, however I am still paying 60 a month for P.M.I. is that legal to keep charging me for that?
    Thank you

  39. Anna Marie Williams says:

    My Bankruptcy was discharged in Feb. 2011. My lawyer filed that we were reaffirming my home and car. The reaffirmation papers for the car were correct and I signed them. The papers for my mortgage were incorrect in that I went through a modifcation approx. a year before and the reaffirmation papers the bank sent me to sign had the terms of my loan before the modification. We gave them time to correct this and as of today 8/29/11 it still has not been done. We also filed suit regarding same and they finally answered denying everything but still have not corrected this. My question is this, we are filing a Summary Judgment Motion, if the Court goes against me can I lose my home? I am worried as I have been in this home for over 25 years and I am also worried as I have read from others that my payments are not being applied to my credit! Please advise.

  40. Anna Marie, if the bankruptcy was discharged before the reaffirmation agreement was filed, then the terms of the unfiled agreement do not apply. Your personal liability on the mortgage may be extinguished. The question about your rights re ownership of the house and the terms that may apply to your payment obligation requires legal advice. I would think that these issues would be part of what your lawyer who filed the summary judgment motion will address, but the bankruptcy has added some complexity to your case.

  41. Javier, generally if you do not reaffirm a mortgage, your personal liability goes away. However I would not assume anything and I would pose this question to your bankruptcy lawyer for advice specific to your case.

  42. I seem to be reading so many stories just like mine which makes me not feel so bad.
    October of 2010 I filed bankruptcy in Atlanta where I live and it was discharged February 2011 and of course my mortgage did not get reaffirmed. I found this out while trying to buy a car in April of 2011. I’m tired of fighting with the mortgage company and the only option I have is to repay my lawyer a fee to reopen the case. I don’t feel I should be paying for anything else and don’t plan on doing so. I’m curious to know will I still receive credit at income tax time? Also, since it shows the house as being part of the bankruptcy if I choose to walk away in a year or so can with no liabilty? I did a remodification on my house actually right before my banktuptcy which lowered my payments but I will have a ballon note in about 23years. I’m starting to wonder if I should just sit still rebuild my credit in other ways then rebuy in a few years. My concern like I said is tax credit while I’m still here and making sure they can’t come after my when I do leave or sell.

  43. I fill BK7 10/2010 pro per because of mortgage and sickness. I was discharged in March of this year and did not reaffirm my home loan with B of A. But I did get a HAMP modification in January 2011 from them after trying for a year filling sure made a difference. I made three trail payment starting 2/1/2011 the last one in May and stop paying then. I heard nothing from them until today 9/15 when FEDEX delivered a permanent modification package. The terms where a change to a fix rate loan and all arrears for tax and interest ($8k) to be paid at the end of the loan in 2034. The new mod also has the HAMP Modification of Loans with Principal Reduction Alternative for timely payment. My reduction is over $10.8k per year for the next three years. As long as I don’t default on more the two payment over that time. My concern are does signing this mean I am now reaffirming the debt and can be held liable for the debt? Two they state if we do get the PRA then it will be report on a 1099c for each year. Does mean in the second and third year I might face a tax problem after the Mortgage Forgiveness Debt Relief Act expires in 2012. I really might do this but not if it put me back on the hook for the mortgage debt. Is it’s just a change in terms of the discharged loan or will signing this mean a reaffirm of loan. I reside in CA my home loan is $225k, after the PRA it would be $194k. My zillow value is around $120k and it will probably take at least 10 years before I see any equity gain.

  44. Linda Nickerson says:

    I went for my debtors hearing on Aug 24, 2011. I think its either 60 or 90 days until final?
    Neither of my mortage companies have sent my attorneys reaffirmation letters. My first is Chase and the second is a line of credit on my home with BofA.
    My question is my monthly maintenance. They just sent me a letter with a whole bunch of late fees and now attorneys fees. I had just sent in one of the 3 payments I am behind. I will be caught up with my payments by the end of the month. Can they charge me all those late fees. They are not listed on my paperwork for the BK.
    Linda

  45. I filed bankruptcy in 2009 and was hoping to keep my house. I did not reaffirm however due to the economy and being a divorce single mom, I am unable to keep up with the payments or even sell because of the loss of value in my subdivision. My house is worth 100000 less than what is owed. I’ve talked with my bank, to no avail and finally stopped paying on it to survive. I checked my credit report and now Expeian is reporting me late. My bankruptcy lawyer said that since I didn’t reaffirm they are not legally allowed to report negative credit on the mortgage. I contacted Experian and they said they were in their rights. If I walk away from this home, will it make me start over again and look even worse for a credit history? I have a career in education, I just couldn’t afford my home that was purchased with 2 incomes, not just mine. I’d like to find a home more affordale.

  46. Ok, just trying to get something straight… If I do not my mortgage, I can continue to live in my house and pay as usual OR I can simply walk away from the property and move somewhere else? (this is important for me to know as I had around $20,000 of negative equity in the home at the time of discharge)

  47. Hi Jonathan, my Chapter 7 was discharged almost 12 months ago and now I recently viewed my credit report. My first AND 2nd mortgages are with the same lender.(GMAC) Both are listed as discharged in bankruptcy. I have been current with both loans from the beginning. My 2nd mortgage is about $16,000 1st is about $155,000 my homes value is around $160,000. I am wondering they would foreclose on me if I stopped paying the 2nd mortgage. I intend on staying in my house. I spoke to the lender and he told me that it is unlikely that they would do anything if the first mortgage was being paid on time. He is going to send me paperwork on loan modifications. Should I fill the papers out and just wait to see what the “investors” offer me? Any advice from you is appreciated.

  48. My husband and I are currently waiting for our Chapter 7 Bankruptcy to be discharged. I guess it will take place in the next few weeks. We did not pay our mortgage for Nov and Dec and do not plan to pay it this month either. We are trying to modify it. If it gets modified will that automatically reaffirm our loan and if so will it reaffirm both the 1st and the 2nd? We are currently $123,000 upside down on our mortgage, however are only $31,000 of that is on the first mortgage…..should we stop paying the second all together and hope to settle for pennies on the dollar later down the road and what should we do with the first? Is it ridiculous to ask the first mortgage to modify our mortgage to the currant value at the current rate for the remainder of the loan? They certainly would make more money from us if they did that than if the foreclose, but is that a realistic scenario? We really do want to stay in our home but it is already at least $123,000 underwater and is in need of many very expensive repairs. We are in MA.

  49. @Sue: I am in exactly the same situation as you. Have you learned anything new since the posting of your comment on April 26, 2011 ? I am inclined to not sign a reaffirmation agreement as a part of my bankruptcy.

  50. My bankruptcy was discharged almost 2 years ago. I did not reaffirm my mortgage but have continued to pay it and have never been late on any of its payments. My credit report shows that I do not have a mortgage at all at this point. I want to buy a different house once my bankruptcy is 2 years old. I know depending on my credit score that I may qualify for an FHA loan at that time. My question is when filling out paperwork for a new loan at this time am I renting or do I still own a home? We are at least 10K upside-down on the property so I plan on letting it go and facing forclosure but I would like this to happen after we are already into a different home. I know once I stop paying and the forclosure happens I would have to wait an additional 3 years to qualify for an FHA loan. I am hoping our loan will already be done before the forclosure takes place and therefor our ability to buy a home will not be affected. Any and all input is welcome.

  51. Chad, the only way to know for sure if you are still the title owner is to run a title search. There are services that will do this task for around $250 or so. If you are still the title owner, and you stop paying, I think that you would not be liable for any money but if the lender then forecloses, you will have to wait the 3 years to qualify for an FHA guarantee. Perhaps you could talk to the bank about accepting a deed in lieu of foreclosure and thus walk away cleanly.

  52. Erin, the questions you are asking calls for legal advice and access to the modification paperwork. I suspect that if you sign a modification, you would be indebting yourself personally as well as subjecting your property to a mortgage lien. You need to seek counsel from either your bankruptcy lawyer, a real estate lawyer or both. Good luck.

  53. Hi Johnathon/bloggers

    I filed ch 7 and it was discharged in 04, I waited 2 years to try and get a loan to fix my roof. The city said I had something on my credit report that was negative and they wouldnt be able to loan me money to fix roof. 4 years later I tried to get a vehicle loan and it was turned down as well. i figured I had to wait for 7 years to pass…So my roof leaked and I continued to pay my mortgage on time and more then the monthly pmt amount. After 8 years I applied again for the city loan and a much needed vehicle for work. I found out from the auto loan rep that my mortgage lein holder was placing negative info on my credit report, making it appear that I filed banckruptcy on my home abnd equity line over and over. Every quarter they would reapply the info to my credit report. So even in 2011 it appears that I filed again. Needless to say I was unable to get the roof fixed My loan is upside down and black mold froom the roof is causing problems for my grandchildren. I’ve been here since 1997 and never missed a payment. Recently I decided to stop paying because I am no l;onger willing to stay in a home with mold and issues that are hazardous to the health of my grand children.
    When I applied for loan mod and hamp…I was turned down due to no equity and bad neighborhood. I guess my question is..how do I find a place for myself and grandbabies with bad credit. I would have to move into a project to find something affordable.
    Who will rent to someone with bad credit and foreclosure.

  54. We filed BK7 and the house was included. but still we continue to live in our house and make monthly payments. in our credit record shows that our mortgage is “discharge BK7″ . if we walk away from our house can the mortgage company change the status of my husband credit record of the mortgage from ” BANCRUPTCY” to “FORECLOSURE” ?

  55. Jonathan, I don’t know who you are, but for the first time since my bankruptcy on January 2009 someone has explained this reaffirmation so well that I GET IT.

    My husband and I signed a reaffirmation letter/form and now I want to change my credit report because it looks as though the house is marked as a charge off. Citi Mortgage swears that they never received anything from my attorneys office but he says that he did in fact send it.

    How in the world can I handle that? I have a copy of the reaffirmation that my attorney wrote and we signed. Would that help me in anyway or do I just quit?

  56. MY HOME LOAN WAS DISCHARGED 3 YEARS AGO DUE TO 7 CHAP BK, I HAVE’N MAKE ANY PAYMENTS SINCE THE BK BUT NOW THE BANK IS FORECLOSING ON ME, THE HOME IS WORTH HALF OF WHAT I USED TO OWE, MY QUESTION IS “CAN I REBUY THE HOUSE AT IS CURRENT PRICE AND IF I CAN WHAT ARE THE CONSEQUENCES OF THE PAST BK DISCHARGED? IN OTHER WORDS CAN THE BANK COME AFTER ME IF I BUY NEW PROPERTY? THANKS.

  57. Hello Jonathan:

    I was discharged from BR Ch 7 in Feb 2010, Colorado. We did not reaffirm. The first mortgage with WF had a loan modification which was completed a few months after discharge. the second is with Chase which have done nothing with. Both show as included in ch 7 bankruptcy will no report for last 2 years. Since, I have moved, kept the property as a rental property, and have been current on the first. Now, I want to buy a new home while keeping my Colorado home. I have been told many different reason why I don’t qualify which centers around the Colorado home and failure to reaffirm. This brings me to a couple of questions if I may:
    1) Can I provide the credit bureaus with my annual statements from WF and ask them to put the current balance and payment history on the credit report?
    2) If there any way to get an FHA loan without selling my colorado home, or reaffirming, or something?
    3) If I open the br case to reaffirm with WF, wouldn’t I be in the same position with Chase as for a new mortgage?
    4) If I reopen the br, does the new 10 year credit report piece clock start again?

    Thank-you for any information you may provide. – Paul

  58. Jonathan,
    I am finding myself in a unique predicament. We discharged a Chapt 7 in April 2010 and it included 2 homes. We had intentions of reaffirming our primary residence and do to poor follow up on my behalf our lawyer did not reaffirm the primary residence which I discovered late last year. I am looking to refi/purchase a new home because since the chapter 7 we have increased our family and are minus an income with more expenses. I am finding that I can’t refi/purchase because our 2nd home didn’t sell until 2011 and we won’t be able to do anything for 5 years after that home being sold. I was told by a loan officer if my current home was reaffirmed that I could possibly refi with them now to lower the payments. Everything has been paid on time of course since the bk and I am wondering if I can reaffirm the house with the original lender? I was initially told “no” which surprises me because common sense tells me the lender would want my personal obligation to the loan. Do you have any helpful advice on this matter? I was hoping there is a process as easy as reaffirming with the current lender and trying to get a lower rate/longerterm/smaller payment somehow when going to do the reaffirmation if reaffirmation is even possible. Thank you for the help…

    Sincerely,
    One stressed out Dad

  59. Question.. I filed a chapter 7 back in 2008. I did not sign a reaffimation. Currently I have fallen behind on loan due to be ill and not having any income.. Can the bank report late payments to all the credit Bureau.. Do they have the right to do this. I lived in Mississippi.

  60. I filed a chapter 7 BK in 2009 which included my mortgage and was discharged in december of 2009. My house had already been in foreclosure status since 2007….they have never completed the foreclosure sale. I had a REM judgement in the amt of 107k, but in the last 2 and a half years I have been receiving statements and bills which now are over 164k. I have read that this is a contempt of the discharge, but I live in PA and my BK attorney doesn’t seem to know how to go about filing against BOA. Is what I am reading correct about the contempt and do you know how long a foreclosure can sit out there without them doing anything.

  61. Judy, if your personal liability on the promissory note associated with your mortgage was discharged in your Chapter 7, then any attempt by a creditor to pursue you personally would be a discharge stay violation. Lenders can take action to recover property as long as they do not go after you personally. If your bankruptcy attorney does not know, then you should speak to another Pennsylvania bankruptcy lawyer. My Bankruptcy Law Network colleague Steve Otto practices in Pennsylvania and may be able to point you in the right direction.

  62. Jackie, I do not believe this is proper since you have no personal liability on the note.

  63. Matt, the problem is that your bankruptcy has been discharged and the only way to reaffirm is to do so in an active case. Most judges will not reopen a Ch. 7 to file a reaffirmation (but you should ask your lawyer to confirm this). Your predicament is not unusual – I wish I had an answer for you. It makes no sense that lenders will not cooperate with you to allow you to reassume personal liability, but they generally will not.

  64. Paul, here are my thoughts:
    1) Can I provide the credit bureaus with my annual statements from WF and ask them to put the current balance and payment history on the credit report?
    JCG: I have never heard of a lender doing this. If you did not reaffirm, your personal liability is extinguished which is why your positive payment history is not showing up.
    2) If there any way to get an FHA loan without selling my colorado home, or reaffirming, or something?
    JCG: I do not know – you should discuss this with a mortgage professional.
    3) If I open the br case to reaffirm with WF, wouldn’t I be in the same position with Chase as for a new mortgage?
    JCG: I think you will have difficulty trying to reopen your bankruptcy to file a reaffirmation. Most judges will not reopen for this purpose.
    4) If I reopen the br, does the new 10 year credit report piece clock start again?
    JCG: If you could reopen, I think that the 10 year reporting period starts when you file, not when the case is closed.

  65. My question isn’t on a mortgage loan, it’s on a car loan. I filed chapter 7 in November 2011 and I didn’t know I needed to request a reaffirmation agreement to keep my loan open. I wanted to keep my car loan out of my bankruptcy which i thought i did. But when I spoke with the loan company they show it was in bankruptcy which was discharged in Feb 2012. My question is can this be changed to be taken off of bankruptcy? They said they would not repo the vehicle as long as payments aren’t late. However, my concern is that I want my loan open and not under bankruptcy so somewhat help build my credit. Is that at all possible

  66. Jessica, probably not. If you did not reaffirm while in bankruptcy, most judges will not let you reopen to file a reaffirmation. Your bankruptcy lawyer may have a different opinion but that’s mine.

  67. Dan, if your debt to the bank was discharged in your Chapter 7, you are free and clear of the debt. I am not aware of any reason why you could not buy it at a foreclosure sale – that should not change the discharged status of the loan.

  68. Angelia, a reaffirmation must be filed in your case file with the clerk of Bankruptcy Court. If the reaffirmation agreement is not filed, it is not enforceable under the bankruptcy laws. The first step would be for your lawyer to look at the docket report for your case to see if the reaff was, in fact, filed. Note as well that if the reaff was not filed it probably is not your lawyer’s fault. All the lawyer can do is send the reaffirmation paperwork back to the lender – the lender has to file it. Your attorney cannot force the lender to process this paperwork.

  69. Chp 7 BK discharged in 4/2011. Continously made mortgage payments. Have never been late even through bankruptcy. Did not reaffirm mortgage.
    Recently called lender, BOA, to refinance to lower rate as our rate is now on the high side; 5.8. (rates are currently something like 3.9) They said they will not until 2 yrs out from BK. And that our most recent 2010 refinance would have had to have been in 2009 or earlier in order to help (based on some new govt laws to help consumers.)
    My question is this, can I stop making 1st & 2nd mortgage payments to force BOA to refinance me which would include us reaffirming our mortgage?
    I’m thining of retaining a mortgage attorney to help fight my case with BOA.
    Help in Detroit, MI!

  70. Hello
    Like many other postings here, I filled for BK Chapter 7 in March 2009 and the final discharge was July 2009. I had seen a lawyer about 6-7 months prior to filing because I owned a home and was buying another one knowing that eventually I would have to let the first home go because it was so upside down and I had to relocate for my job. Once I purchased the 2nd home, I stopped making the payments on the 1st home the next month after I purchased the second. I did have a realtor trying to do a short sale on the 1st home but the mortgage company forclosed before I found a buyer. Told the attorney from the very beginning my sole purpose of filing BK chp 7 was to protect my new 2nd home as it was now my primary home & I intend to keep it. The intention to reaffirm was checked on the BK court docs but the lawyer never told me about the seperate reaffirmation form that also needed to be filed I guess.
    Right about the time my BK was finalized, my mortgage was sold to another lender let say in June 2009 and My BK was all finalized and discharged in July 2009. The new lender who bought my loan was never served with the paperwork telling them I had filed for BK and the original lender who sold the loan to them must not have provided the new lender with that information.

    So from July 2009 till now April 2012 i’ve made every payment on time and the NEW lender had NOT listed my mortgage on any credit report as discharged and they had also been reporting my payments as current each month. So for over 2 years this new lender. OCWEN, reported my mortgage as current. In Apr. 2012, OCWEN has now listed my loan as discharged and removed the last 2 years of payment history from my reports!

    my question is, can OCWEN do this after 2 years remove my payment history from my credit reports and list the loan as discharged in BK? Is there a time limit? My interest rate is 6.5% and it’s almost been 3 years since the BK, I was preparing to try and refi this loan but will I be able to now if my loan shows as discharged? Thanks

  71. andre Whetstone says:

    @Jonathan: I am going through the same thing… My credit reports say that the Mortgage was “dismissed” in the bankruptcy. and does not show that I am and have continued to make all my payments. The mortgage company is NO help and just tell me that because I never signed a reaffirmation of debt ( something my lawyer never gave me of told me about) My credit report could not be changed. This is so frustrating and confusing. I f the debt has been released – then why am I paying on it?…does this mean I can walk away from the house with no ill effects to my credit… I f I continue to pay do I still get the title when I have payed off the mortgage? With the economy the way it is after 15 yrs of mortgage payments we Owe more the the house is worth.

  72. My Nevada bk was just discharged. Ten days after the discharge, I received reaffirmation papers from my mortgage lender’s attorney. I owe about $240k for a market value of about $80k. My intention was to live in this home for the rest of my life and pay it off some day. I am understanding now, that without the reaffirmation, I cannot be held to make the payment and the lender is prohibited to attempt to collect. Would that put me at risk of foreclosure? What can the lender do if I stop paying? (I live in the county with the highest unemployment rate in the U.S. and my work is intermittent.) Thank you for your comments.

  73. Jonathan,

    My wife and I are on the mortgage together. My wife had filed bankruptcy and it’s been discharged almost 2 years. It was discovered while I was trying to refi our mortgage with our current mortgage company that our mortgage did not get reaffirmed. We have continued to pay our mortgage and have never been late on any of its payments. The refi was denied because of the reaffirmation was not filed. My question is why would it matter if the reaffirmation was filed or not if I am still on the mortgage. I am still legally obligated under the current mortgage. I then asked to refi just under my name, but I was still denied. We are struggling to pay the mortgage each month. My mortgage company told me that I would have a hard time refinancing with another financial institution. I am stuck at my current interest rate of 6.8% and it was a 25 year loan that we have been paying on for I believe 10 years. We would like to get a lower rate for a 30 year loan.

  74. I filed for Chapter 7 in early 2008 and was discharged in 11/2008. I did not reaffirm my mortgage and I am still in my home to date. The payments I make do not show up on my credit report, and this had me alarmed. I called my lawyer and spoke to GMAC mortgage and even though I am current in good standing I am not liable for the mortgage. As long as I make my payments I am good. When the mortgage is mature I still get title, but if when I decide to move and the value is still lower than what I owe I can freely surrender the home to the bank and move on because I am protected by my bankruptcy filing. I could refinance and lower my payment, but this would be a new loan and I like the idea of being able to walk if I had to.

  75. My husband and I filed Chapter 7 bankruptcy in January of 2008. It was discharged in April of 2008. We were ill-informed, and didn’t do our research so did many things the wrong way. We thought since we didn’t reaffirm anything once we got our forclosure notice from the bank we they could make us get out asap. We got our first notice and were told when we got the second notice we could have to be out within 24 hours up to 10 days. We had 3 little children and kind of freaked out because we didn’t think we would be able to get packed up and moved quickly should that happen as we had no place to go. My husband had a job opprotunity in another state, so we moved about 1 day after the BK was discharged. The job didn’t work out well at all and we ended up finding out we could work with the bank and get our home back as the sherrifs sale hadn’t happened yet. The bank added all kinds of fees to our loan, and we signed papers again, and moved back home in September of 2008, 5 months later. We had called the bank when we moved so they could take possession etc. Now we are trying to purchase a travel trailer and upon going over our credit report realized that our house isn’t on there. I called our Mortgage company and they said that since we didn’t reaffirm the house, they can’t report any positive activity on our account even though we have made our payments faithfully for almost 4 years. They said we are not liable for the debt because it was discharged in the bankruptcy. Now I am confused. We want to sell this house and buy another, but if this is the case, why bother selling this one, does that mean we can just walk away from this one and forget about it and our obligation is fulfilled? Or then they put negative things on our credit reports, they just can’t put good things? This house needs definite work before we can sell it and we don’t have the money to put into those repairs. I’m totally confused as to where we stand. If paying my bill each month isn’t doing anything, it kind of feels like, why bother?

    Would it be better for us to try to refinance our house then we would have a current loan? We have been told we couldn’t get a loan for cheaper than what we have now, so I am confused.

  76. James Inglot says:

    Bankruptcy was discharged in 2004. Did not reaffirm the home loan. Have been making payments on time since. Just receive statements that say for Informational purposes only.
    I have been approved by a lender/Bank to buy another home. They are aware I filed bankruptcy before and have been making payments. Their only concern is that I keep making payments on current loan until new home is closed on.
    I then plan to walk way from old home. Since the debt was discharged I believe I am OK and will not owe anything in first home.

    My concern is since they do hold the right (Lien) to file a foreclosure will this somehow effect my new loan later in the loan process and prevent closing on the new home? Also there is no equlity in old home will they try to put a lien on new house?
    This is a great blog, Thank you in advance for any info. you can provide.

  77. Hi Jonathan, my scenario: I filed BK7 and was discharged in July 2010, My mortgage was included and not re-affirmed, however there is a joint borrower on it, I’ve read above that the Joint borrower is not affected and it will show on his/her Credit Report as the account being included in a BK but won’t affect the joint borrower’s credit. My question is.. if I now walk away from the mortgage, will the lender go after the Joint Borrower to collect/Forclose? and also will it eventually show on My credit report as a Foreclosure?

    Thanks!
    Max

  78. @Jonathan:

    I am in the same boat. I filed for a bankruptcy 5 years ago. I did not know that I needed a reaffirmation until I pulled up my credit report while trying to refinance my home for a much lower intrest rate. My credit report shows that I have not paid on the property for this whole time but I have. I can’t seem to refinace because of this showing on my credit report. So who do I call to refinance. Because I was told that no one will do a refinance with me if my loan was not reaffirmed including the company that whole my loan now. What should I do. To refinance my mortgage could potentially save me 500.00 a month.

  79. I have been reading and researching bankruptcy posts for some time to get knowledge of what people, besides me, go through when financial upheaval hits a family. I have found it interesting while doing my research on reading postings, that there are not any comments about the liability of the property that you leave behind that is still in your name even though you are not legally responsible to pay for it as you have been issued a standard chapter 7 discharge. I have decided to post my experience of what I did. Thankfully for me I have a good relationship with my family attorney, and I would never go up against something like this without seeking my attorney.

    I am free of all that debt, but as my attorney told me ,it is was only the first part to end my problems.
    The second 1/2 is just as important as the first and that is while I am discharged of the debt, it is important to make sure I get my name off from the property. if the lender does not want to foreclose to take back the property right-a-way and does not foreclose for a period of time , and any owner who lets this go and does not take the responsibility to seek out a foreclosure attorney to start the process himself, the debtor can lead himself open to accumulated hoa fees, property taxes, vagrants destroying the property, plumbing costs from broken pipes and s etc. Until property clears title of your name. There is no free lunch and you just cannot walk-away. I have had a successful bankruptcy of which I am grateful for and now I am in the process of working with my foreclosure attorney.

  80. Rhonda L says:

    we were discharged Dec 2009 chapter 7. I had my car and my gmac mortgage included in the discharge both showing $0 balance. I have since returned the car 1 yr ago but the house is another story. We vacated last March 2011, we did not reaffirm either loan. We have one income and this is why all of this occured. We tried to keep the house be fell further and further behind. I swear I have talked to everyone at GMAC mortgage about this darn house. I don’t know how many times we have said it was vacant. At first the property was being cared for but I go by there on occasion and they have since changed the locks and there is a note on the door saying it is abandoned. The property is getting worse and worse, no longer cared for. Since the property is still in our name they don’t care, they said we should rent it out or try to short sale it. We no longer have possession. Now they say that the bankruptcy doesnt really matter and that they can put a foreclosure on our record, we need to pay for the homeowners ins and appraisal etc. I gave it back to them over a year ago and it had started foreclosure last summer and the company doing it said all they needed was one piece of paper which seemed to be a secret becuz after talking to 5 different GMAC people no one would tell me what that was. I just want to close this chapter of my life and it is a big chip on my shoulder. I do not know what to do and am now going thru a divorce. Please any advise? Our bankruptcy lawyer said we should have lived there for free but my morals kept me from doing so. Help…..

  81. Jonathan,

    My husband and I just filed for Chap. 7 bankruptcy for medical reasons. We expect to be discharged shortly. At the creditor’s meeting, we stated that we wanted to keep our home in addition to filing a Statement of Intention to keep the home; not an Reaffirmation Agreement as I did with my vehicle loan. This morning, I found a someone snooping in my windows and taking photographs. When I approached I was told that BOA hired her to ensure the property was occupied. We are currently one month late on our mortgage and we are about to bring it current. Why are they taking pictures and wanting know if our property is occupied? Should I assume it is their intention to take action against us? i.e. potential foreclosure?

  82. hi my question is that i filed chapter 7 and it was discharged in november of 08 … i dont know if my loan ever got reaffirmed or not since all my wf lender did was keep putting me on 3 to 6 month modification loans for over a year and a half . and now they say they cant help me and want to foreclose on me . my 2nd mortgage was re-modified pretty quickly but after making 5 payments and getting laid off and getting behind again . i looked at my credit report and only shows both the first and second mortgage being included in to the bankruptcy . and i cant find no evidence about my 5 payments that i did make and no history of the new motgage loan on my 2nd mortgage… at this point i would like to just offer lieu in of deed or just walk away ? any advise or comments would be great … basically how do you find out if your loan was reaffirmed or not ? ok thanks

  83. We filed a Chapter 7 BK in 10/2009 and the property was abandoned by the trustee and we were discharged in 3/10. The Mortgage lenders was granted the Motion for relief from stay to foreclose in 12/2009. The sherriff’s sale has been adjourned every 30-45 days since then. As of today 6/21/2012 the foreclosure has not taken place. We moved from the property just after the trustee abandoned the property becuase we didn’t want to have an eviction process and have our family out on the street. The condo association has filed numerous liens on the property for thier monthly fees totaling over 20k$ they were now granted a civil judgement and have gone into our bank accounts and are requesting wage garnishments. Are we really liable for these fees. How were we to know that it would take 3 years and counting to foreclose and remove this nightmare. Any suggestions on how to find out why they haven’t foreclosed yet or how we can fight the judgements after they have been granted. thanks

  84. Is stating that you plan to reaffirm your mortgage on the Chapter 7 Individual Debtor’s Statement of Intention and a reaffirmation agreement the same thing? I stated that I intended to reaffirm the mortgage debt but did not sign anything beyond the Chapter 7 Individual Debtor’s Statement of Intention page. Is that reaffirming the debt? Please advise.
    Thank you for your time.

  85. Crystal, a reaffirmation does not go into force until you and the creditor both sign off on it. Merely signalling your intent to reaffirm is not the same thing as actually executing a reaffirmation agreement.

  86. Lori, this issue – lawsuits and collection efforts by condo associations on not-yet-foreclosed properties – has become a significant issue in some jurisdictions. My thought is that you are probably going to need to speak with a litigator who handles real estate matters in your jurisdiction. A judge could, in theory, injoin this type of collection action but absent a court order, the HOA will pursue this aggressively.

  87. Larry, a reaffirmation must be filed in writing in your bankruptcy case. If you can get your lawyer to pull a copy of the docket report from PACER, you can see right away if any reaffirmation was filed.

  88. Sue, reaffirmation is a 3 way street – you have to agree to it, the lender has to agree to it and the trustee has to abandon his interest in the property. Merely stating that you wish to reaffirm on your statement of intentions is not enough. I would suggest that you ask your lawyer to communicate with the lender or lender’s attorney about their position regarding a possible reaffirmation.

  89. Rhonda, unfortunately I am not aware of anything you can do to force a lender to take title and possession of a property surrendered in bankruptcy. This is a problem in that it damages your credit and possibly makes you liable for on-going HOA charges. At some point, state legislatures are going to have to address this issue to keep former homeowners out of surrendered home limbo.

  90. Eva, you would not believe how many questions I get about reaffirmation. And there are many opinions. Some lawyers take the position that a debtor should never reaffirm, while other lawyers send in signed reaffirmation paperwork but never get any cooperation from the lender. I tend to discourage reaffirmation but as you point out, not reaffirming can create credit issues later on.

  91. Max, I believe that, unfortunately, the answer to both questions is “yes.”

  92. James, I do not feel comfortable predicting exactly what will happen in your case since there are a lot of parties involved and I don’t even know what jurisdiction you live in. My guess is that if you qualify for a mortgage now, a foreclosure on an old note where you have no personal liability will not result in a change of terms on the new mortgage. Further, I can’t see how a lien from the old house would find its way to the new one. A good mortgage professional should be able to offer insight as well. Good luck.

  93. Karen, if your bankruptcy was discharged and your case closed, you are not going to be able to file reaffirmation paperwork – it is likely too late. Given the circumstances you describe, I question whether it would have made sense to reaffirm in any case. This might be a situation where “stay and pay” is the best option. What does your lawyer advise?

  94. Rochelle, the minute you filed Chapter 7, the automatic stay went into effect. When your case was discharged with no reaffirmed mortgage, I think that the lender was within its rights to remove any reference to payments made as of the date of filing.

  95. Yes.

  96. Kelly, I would look carefully at your credit report. Bankruptcy can remain for only 10 years from the date of filing. Discharged debts should show a zero balance.

  97. Dave, I hesitate to predict what GMAC or its successors would do in this situation. I tend to agree with the lender that a 2nd mortgage holder with negative equity will probably do nothing in terms of foreclosure. I would probably fill out the modification paperwork and then you can make a decision based on the offer.

  98. Hi,

    We’ve been reading through all your posts on reaffirmation, but we’re still a little confused. Our Chapter 7 bankruptcy was discharged in 2002, in VA. It was our goal, and still is, to pay off our house and land. We’ve faithfully made our payments and never been late. We didn’t sign a reaffirmation of debt for our house because our lawyer told us to just keep making our payments and we would be fine. We didn’t know we even needed to sign a reaffirmation agreement, or we certainly would have done it. But now we’re stuck, and we wonder; do we have any legal rights to our home at all, since the debt was technically discharged in the bankruptcy? Can the mortgage company just randomly foreclose, even though we’ve kept payments up to date? We still have a ways to go before we pay this place off. Can we sell it, refinance, build equity, etc.?? Will we get the title when we pay it off?

  99. @Jonathan: I am having a similair problem. My husband and I are trying to buy a new home and use our current home as income property. It is being denied in underwriting because I did not reaffirm the mortgage. We have never been late on our payments EVER!!! Our mortgage company is reporting ours as discharged even though they are receiving our payments every month. They say they can not change it unless it is reaffirmed. My lawyer says a judge will not open a discharged case to reaffirm dept. and I would be waisting my time. So apparently I am stuck with never being able to buy a new home and have income property until I forclose???? are they crazy. We qualified in every other way……

  100. My Bancruptcy was discharged in November 2011. My condo was included among my personal property. BOA Did not fie a motion for relief of stay but the condo association did. Since then, the condo association filed motions with the court to foreclose to recoupe the fees owed. The condo is in strict foreclosure with a law date coming up on Sept 10 2012. My understanding is that the title transfers out of my name at this time. My nderstanding is that I am no longer responsible for debt to BOA through the bancruptcy, now with the title out of my name will BOA have options to try and come after me personally. Should I send a letter to BOA letting them know the title is no longer in my name or can I completely walk away safety.

  101. Cheri, the law relating to condo associations, mortgage foreclosures and Chapter 7 discharges is unsettled, to say the least. The law of your state (which you did not disclose) may answer some of these questions. I think you need to discuss these questions with your bankruptcy lawyer as you are asking for legal advice.

  102. Lorie, you have succinctly described a problem that thousands of Chapter 7 debtors are facing. The only solution might be to refinance your current house to build your credit, then try to move, or try to get a co-signer for this new mortgage.

  103. DJ, the bankruptcy discharge eliminated your personal liability on the mortgage. The lender still has a lien against the property. Technically, your bankruptcy filing was most likely a “default event” under the terms of your mortgage but I think it is very unlikely that the lender would proceed against you. There is also a legal doctrine called “laches” that might apply – basically a party that sits on its rights for a long time may be precluded, as a matter of fairness (equity), from enforcing those rights. A big issue here is that all those payments you are making will not help your credit at all since your personal liability has been extinguished. You can refinance or sell – that would re-establish personal liability and thus, positively impact your credit.

  104. Jasmine, I think that the bank is correct in stating that they are not obligated to report your on-going payments because you did not reaffirm. I don’t think they can report anything negative if you walk away. This might be a situation where a knowledgeable mortgage broker could help you unravel the credit implications of walking away in terms of how that would impact your qualifying for another mortgage.

  105. Hi Jonathan,
    I went through a Chapter 7 bankruptcy in FL, and did not reaffirm the mortgage, as it just did not make sense to do so. The bank has begun foreclosure proceedings, and set the sale date. Two questions: is there anything else I need to do outside of getting out of the house? And does the foreclosure now affect my credit? (My bankruptcy was discharged in 2010). My credit rating has recovered to a fair condition, and I do not want anything to ruin that.

    Thank you,

  106. Christina, I am not a Florida lawyer and would defer to counsel there.  As a general rule, my belief is that if you surrendered your home as part of a Chapter 7 and did not reaffirm, you would not owe any more money.  As far as your credit is concerned, a foreclosure is a separate credit event and it may ding your credit report.  However, the damage should not be terrible since you will not owe any money and you have already gone through bankruptcy.

  107. Tom, I suspect that the refi was denied because the payments you have been making are not showing as positive credit for your credit report.  I would not assume that you cannot get a new loan to take you out of the non-reporting situation.  You  may have to get a higher priced loan for a few years then refi again to a lower rate once your creditworthiness improves.

  108. Hi Jonathan,

    My husband filed bankruptcy and our mortgage was not reaffirmed. I tried to refiance with our mortgage company and quickenloans and was turned down because we did not reaffirm the mortgage ( I qualified for a lower rate then what we have) We want to keep the house but can not afford the mortgage the way it is. We do not qualify for any type of modification . Our mortgage company won’t do anything to help us. How do I get a mortgage company to reaffirm or give me a new mortgage? With this economy our house is not worth what we paid so selling won’t get us anywhere, I don’t really want to walk away from it either ( that has it’s own host of problems)
    Is there away to quit claim the house to me so that my husband’s name comes off of it and then I could refinance it in my name? I don’t know where to go for help reguarding our whole situation. Who deals with these types of problems? A lawyer ? A mortgage consultant?? I need some guidance..You are the first person I have found who is answering these type of questions.. any advice would be great. Thank you!!

  109. Amanda, you could quit claim title but that will not take his name off the mortgage loan.  The problem is that by not reaffirming, your husband no longer has any personal liability to make the payments and, thus, the payment you are making does not positively impact his credit.   I am assuming that you do not have sufficient income and/or credit to refinance on your own, without him.  I would talk to a few more mortgage brokers to see if you can find a program that would allow for such a refinance.  I’d look for an independent mortgage broker, not one tied to a particular bank or mortgage company.  The other thing I would suggest is for your husband to pull his credit report to confirm that all debts included in his bankruptcy have come off.  Usually it takes about a year for credit to recover post bankruptcy and once is credit is back then qualifying could be more feasible.  I regularly review credit reports 5 to 6 months post bankruptcy and frequently find errors that I can fix.

  110. Lee, if you did not reafffirm your mortgages, I would take the position that your personal obligation to pay has been extinguished and that you can walk away.   I do not practice in Michigan so I would definitely pose this question to your Detroit area Chapter 7 lawyer.

  111. I did not reaffirm my mortgage. I filed in April of 12- it was discharged. I have been paying in full on time every month. Two questions:

    I am selling my home- I will make a profit, will there be any problems given I will have enough to pay the balance in full to Citi.

    I have checked credit from 2 agencies. One does not list any payments- the account stops in April. I disputed this, providing the pay out amount I had recently obtained from Citi and Citi reported I owe nothing.

    The other ( I protested and no change) list no payments being made from April, to current- listing every month as a month I have not paid.

    Can Citi lie and state no payments have been made when payments are current. Should I write them and demand my money back as I am taking a monthly hit for non-payment?

  112. @Beth, in my opinion, if you are title owner and you sell the house and pay off the existing loans, you are entitled to keep any profit. However, please do not take my opinion as legal advice since every state has its own rules – you should check with your bankruptcy lawyer or a real estate lawyer in your state for confirmation. Lenders do not report any payments because you have no personal liability. The debt is owed on the loan and by paying monthly payments you protected your equity. I am not aware of any argument to demand a refund.

  113. I am confused like every one else here. searching for a answer to help us. Back in June 2010. we were forced to file chapter 7 against our creditors. we were able to reafirm some of our debt.. How ever we were advised not to reafirm with our mortgage. Well we tried any way to do that .. the WF said they would not reafirm our mortgage. it is 2012 we are still paying on this loan. I know if we walk away we are still protected under the bankrupcty.. My husband name is still showing co owner on the MERS report.. We have tried to get a loan for another home. so we can build our credit.. If we walk away from this home. How long will it be before we can get a new one.. Its been two years since bankrupcty.. I know it want be reported on our credit report. because of the bankrupcty.. but in order for my husband name to be relaease off the mers we have to release our self from this home.. Can you confirm this for me,Alabama here

  114. Pawa, if you do not reaffirm a mortgage debt it will not appear on your credit, ever, because you have no personal liability on the loan. As far as how long it will take to rebuild your credit that will depend on numerous factors, including your income, any new accounts you can establish and a variety of other things. take a look at the Fair Isaac web site at http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx.

  115. Chapter 7 was discharged 06-12. We didnt reaffirm our mortgage. Now BOA has agreed to do a loan modification with principal reduction. I’m in my 3 month trial period. Now I get a notice stating the Trustee is wanting to sell my home. Is this possible a year later? I have no equilty in the home.

  116. There is a difference between a case being discharged and closed. If you had equity the trustee most likely kept the case open for the purpose of identifying and liquidating that equity. The discharge only means that creditor claims have been discharged. This is an important distinction and I’m glad you posted your comment.

  117. There is no equality in my home. I owe 231,000 and its worth 104,000. The bank has offered a principal reductions. I’m hoping the BK trustee will just close my case

  118. If there is no equity I can’t see why the trustee would want to sell the property. Are you sure that you are not looking at a motion for relief from stay filed by the lender to pursue foreclosure? Have you spoken to your lawyer about this?

  119. My attorney told me to contact the BK trustee. I faxed him proof that I’m approved for the loan modification. The letter I received was from the BK trustee on my case.

  120. @Kendra, I find it odd that your lawyer would advise you to contact the trustee directly. That would seem to be a job for your lawyer. Your lawyer needs to find out if the trustee is asserting an interest in the property and, if there is no equity, why.

  121. I filed a chapter 7 and thought I would want to reaffirm. But now I am having second thoughts. The mortgage company has sent me a reaffirmation agreement as those were my original intentions. I have approximately $133K morgage. But my home due to the economic downfall is only worth $111,000. This figure was taken from local market conditions in my neighborhood. I have a 30 yr FHA loan. I would like to reaffirm but offer a balance reduction of the actual value of the home. My interest rate is 3.78% and my payments are $939 per month. The only difference I would like to offer is the balance reduction to stay in line with the value and hopefully gain some equity. What would you advise?

  122. After reading the posts, I am in the same boat as most of these people. In my dealings with WF, they stated that my lawyer had to call them on the phone to get the reaffirmation paperwork sent. my lawyer states that he has never had to do this to get reaffirmation paperwork. I really thought that I was in a unique position, but can see that they are affecting a lot of people who do the right thing and try to keep their homes and pay their mortgages. Do you know if there is any thought of a class action or other legal dispute against them for unethical business practices? I have contacted the Massachusetts Attorney General which got a quick response from WF, but we will see. I encourage everyone to do the same so the bans get the message if nothing else.

  123. Dear Sir, My question is that we have been discharged from our chapter 7. Unfortunately I didn’t read the paper work. We wanted to re-affirm our car as it was new and a mobile home so we would continue to have a residence. Years later I found out that the home was actually placed in bankrupsey. So we are now raising a grandchild and don’t have the financial means to continue to pay on this mortage as we have continued to do so. The old company sold our account to a new company and they never asked for one to be signed. Can we stop paying payments and can we ask for title as we may get the other grandchild due to drug use and may need to sell and get larger residence. Thanks so much, Pam Pitts.

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  1. [...] and about the consequences of not reaffirming a mortgage loan.  I have previously written about the consequences of not reaffirming a mortgage debt.   The 2005 BAPCPA changes to the Bankruptcy Code attempts to force debtors to choose between [...]

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