I recently received an email from a blog reader asking about his obligations to his mortgage company when he does not reaffirm:
I have read your blog and you are very through so I write you with hopes that you might answer this question for me. I file Chapter 7 in 08, and did not reaffirm my loan. I am still living in the house and did make some payments. However, i have not for the last 8 months. It is my understanding that I must sign a document to reaffirm and that continuing payment in itself is not a reaffirmation…or? Well it gets a little more complicated. My house is valued at $410,000 and the bank has offered me a deal that is going to be hard to refuse. They have agreed to let me do a short re-fi in the amount of 180k. If I agree to that is that in itself a reaffirmation?
Here is my response: in most cases, when you take out a mortgage loan, you are signing two different types of agreements. The first type is a promissory note whereby you personally agree to make the payments. The second type of obligation creates a property lien, meaning that you, as the owner of the property, pledges that property as collateral for the loan.
More on Can You be Sued for Non-payment of your Mortgage if You Do Not Reaffirm?
The United States Supreme Court rarely accepts cases that affect consumer bankruptcy debtors. Recently, however, the Court considered an issue that potentially impacts all debtors – the treatment of exemptions.
The term "exemptions" refers to property you own that is protected from the reach of the trustee or creditors. For example, every state provides for exemptions that include your clothes, a certain amount of household goods, a certain amount of equity your car, and a certain amount of equity in your home. Georgia has fairly stingy exemptions – you can read the Georgia exemption law by clicking on the link.
More on Ruling by Supreme Court Impacts Bankruptcy Exemptions in Georgia
Filed under Chapter 7 issues, Protected property issues by 
Last October, I wrote a post on this blog about bankruptcy fraud, and pointed out that everything included in a bankruptcy filing is subject to scrutiny by the office of the United States Trustee, which is an arm of the United States Department of Justice. In other words, false statements on a bankruptcy petition could land a debtor in hot water – dismissal of the bankruptcy case, fines and even prison.
Filed under Chapter 13 issues, Chapter 7 issues, Fraudulent transfers by
Because the bankruptcy system operates efficiently and quickly and it serves hundreds of people every day, I sense that many bankruptcy debtors forget that everything they submit to the bankruptcy court is done so under penalty of perjury. I recently ran across an article from a Texas newspaper about a Chapter 7 debtor who ended up in federal prison, convicted of bankruptcy fraud, because he failed to disclose an $84,000 insurance payment, proceeds from the sale of a vehicle and several bank accounts. This particular debtor used Chapter 7 to discharge over $1 million in liabilities.
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Earlier this month I received a call from a Chapter 7 client that I had represented several years ago. He is attempting to refinance his house and has discovered that a judgment creditor has a lien for several thousand dollars. The creditor was listed on the case, but neither he no I knew that there was any judgment.
More on Forgotten Lawsuit Creates Big Problems for Prior Chapter 7 Client
Filed under Chapter 7 issues, Post bankruptcy credit rebuilding by
Recently I met with a client who was looking into filing bankruptcy because of credit card and medical debt. Among his creditors, however, was an individual, an insurance company and fines due a local county. When I asked about this, he explained that about a year ago, he was involved in an auto accident that was his fault. He further explained that the individual sued him and that damages awarded were more than his insurance coverage, and that he also had fines because the accident occurred when he was under the influence.
More on Debts Arising from Impaired Driving are Not Dischargeable
Filed under Chapter 7 issues, Creditor discharge actions by
My Bankruptcy Law Network colleague Rachel Foley from Kansas City has written a useful article on the Bankruptcy Law Network blog that brings to light a problem that many debtors (and perhaps many debtors' attorneys) don't think about too much – bankruptcy fraud.
Filed under Chapter 13 issues, Chapter 7 issues by
This past week, I received a call from one of my Chapter 7 clients. Earlier this week, he had received a call from his brother advising him that he was a beneficiary of the estate of a great aunt who had passed away earlier this year. According to my client, his interest in this estate was in the form of a 1/9 share of two parcels of property. The other 8 shareholders were cousins, some of whom he barely knows. My client estimates that the value of the property is between $400,000 and $500,000, meaning that 1/9 of this bequest is worth $50,000 at most.
Filed under Chapter 7 issues by
I was recently interviewed by a national magazine about how my clients recover from Chapter 7 bankruptcy. Some of the tips I discussed during the interview included:
- asking a friend or relative to add you as an authorized user on a MasterCard or Visa
More on Have You Had Any Success in Recovering from Bankruptcy?
Filed under Chapter 7 issues, Post bankruptcy credit rebuilding by
I have been getting a lot of questions recently about reaffirmation 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 reaffirmation or surrender of their collateral. The trend I am sensing both here in the Northern District of Georgia and elsewhere around the country suggests that bankruptcy judges are not particularly inclined to force this issue. In cases where the debtor cannot or will not sign a reaffirmation there seems to be a judicial acceptance of the old "stay and pay" process.
More on If I Do Not Reaffirm My Mortgage in Chapter 7, Do I Automatically Lose Title to my House?
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