QUESTION
Should we reaffirm our mortgage debt while filing a chapter 7 bankruptcy?
Asked on Dec 05th, 2011 on Bankruptcy - Colorado
More details to this question:
Would it be wise to reaffirm the debt of your mortgage when filling a chapter 7 bankruptcy? Or should we wait?
17 ANSWERS
A reaffirmation agreement must be filed with the court while the bankruptcy is still open. When it is "wise" or not to reaffirm a debt is a question depending on facts very specific to your situation.
Answered on Dec 14th, 2011 at 4:24 PM
Bankruptcy Attorney serving Cleveland, OH
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Benson Law Firm
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It depends. If you have significant equity in the property, you may want to consider reaffirming the debt since your payments would then be reported to the credit agencies for purposes of boosting your score post-filing. If you are under water on your mortgage and you were my client, I would suggest you not reaffirm your mortgage. Then if something happens post-filing and you want to walk away from the house, you wouldn't have any personal obligation on the balance of the loan. But these are conversations best left to you and your attorney in light of your specific situation.
Answered on Dec 09th, 2011 at 11:26 AM
Glen Edward Ashman
No! Not now. Not later. First of all get a lawyer. Pro se bankruptcies almost always go badly. The reason I know you do not have a lawyer is your question. There is almost always no benefit and quite a few bad consequences from reaffirming realty, and, in most of the country, you will keep the house without one. The few exceptions are ones that your lawyer will recognize. A good lawyer will help you avoid the type mistake you are about to make.
Answered on Dec 09th, 2011 at 10:21 AM
Bankruptcy Attorney serving Dallas, TX
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Polk & Associates
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In the vast majority of cases, reaffirming real estate is a really bad idea. There is no real benefit to reaffirming the mortgage. However, there is a ton of downside. They can't take your house away just because you don't reaffirm the mortgage. If you do reaffirm it, you've put yourself back on the hook to be personally liable for a debt that your bankruptcy helped you get rid of. I don't have enough fingers and toes to count all the times my clients have called 9 months later to say how glad they are that I wouldn't let them reaffirm the mortgage because things aren't going well and they need to walk away from the house. If they'd reaffirmed, they'd owe a deficiency balance after foreclosure or short sale, they'd owe legal and broker fees due to the transaction, and they'd owe IRS taxes because of it. But because they never reaffirmed the mortgage, they can simply walk away and not owe anything further.
Answered on Dec 09th, 2011 at 9:29 AM
Consumer Bankruptcy Attorney serving Worcester, MA
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Law Offices of James Wingfield
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In Massachusetts a mortgagee generally cannot foreclose on your house absent a material breach of the mortgage. Typically a material breach is a payment default. If you reaffirm your debt under the mortgage loan, you will be *personally liable* for the debt, even after the bankruptcy. That means if you are unable to pay your mortgage the creditor can foreclose on the house i.e., take the house away from you after which foreclosure you could still owe money to the bank. Without the reaffirmation, should the foreclosure scenario I described come to fruition the bank cannot collect from you. Armed with an understanding of the terms and process, you should ask yourself how do you gain from a reaffirmation? If you are behind on payments and the bank is agreeing to some sort of forbearance from foreclosure as part of a modification, or if the bank is agreeing to reducing payments or otherwise offering you some sort of favorable terms, then a reaffirmation might be in your interest. Barring that, a reaffirmation is likely not in your interest.
Answered on Dec 09th, 2011 at 8:47 AM
There is never a good reason to re-affirm a mortgage unless they agree to lower the interest rate and/or the principal amount. Even then It would have to be a really sweet deal before I would recommend it.
Answered on Dec 09th, 2011 at 8:46 AM
Chapter 7 Bankruptcy Attorney serving Milwaukee, WI
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Law Offices of Deborah A. Stencel
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This question is very complex. If you have an attorney who helped you file the bankruptcy, you should call him or her to discuss this. When discussing this with my clients, I need to know whether they can afford their home, the value of the home, the balance of the mortgage, whether there are any other liens on the property, and occasionally I need additional information to form an opinion. In general, reaffirmations must be signed and filed during the bankruptcy and cannot be done later. Signing a reaffirmation is like pretending the bankruptcy did not happen as to the debt being reaffirmed. A reaff on a home should only be signed if the homeowner wants to keep the home but that should not be the end of the analysis. Please discuss this with your attorney. Note: this answer was for informational purposes only. My response is not intended to establish an attorney-client relationship. In general, it is best to speak in person with an attorney regarding your situation and legal questions.
Answered on Dec 09th, 2011 at 8:40 AM
Bankruptcy Attorney serving Seattle, WA
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The Law Office of Marc S. Stern
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In spite of what some mortgage creditors tell you, the majority of the decisions say that it is not necessary to reaffirm a real estate mortgage. I can conceive of no good reason to do so.
Answered on Dec 09th, 2011 at 8:36 AM
Bankruptcy Attorney serving Hayward, CA
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Carballo Law Offices
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Reaffirming mortgages is not required and should not be done unless the bank is reducing the interest or loan balance.
Answered on Dec 09th, 2011 at 8:35 AM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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When you file chapter 7 bankruptcy you receive a discharge of debts. For instance, you no longer have personal liability for your mortgages. This means that if you later default you cannot be sued. Of course, the mortgage lender retains its security interest in the property. In order to keep the property you must make payment. It is inadvisable to reaffirm a mortgage debt.
Answered on Dec 09th, 2011 at 8:27 AM
Bankruptcy Decision Attorney serving San Diego, CA
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Law Office of Daniel G. Shay
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No, we never reaffirm mortgages.
Answered on Dec 08th, 2011 at 10:30 PM
Bankruptcy Attorney serving Seattle, WA
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Symmes Law Group, PLLC
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No, you should never reaffirm a mortgage. Just continue to make your payments.
Answered on Dec 08th, 2011 at 10:18 PM
judith runyon
Absolutely not. You are not required to and shouldn't.
Answered on Dec 08th, 2011 at 10:16 PM
Bankruptcy Attorney serving Atlanta, GA
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Jakob-Barnes Law Firm, LLC
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I would advise not reaffirming on your mortgage in a Chapter 7 bankruptcy. If you reaffirm on the debt, you are personally liable again. If you do not reaffirm, you can walk away from the house at anytime without the personal liability. The mortgage company would still have to go through foreclosure procedures to take back the house.
Answered on Dec 08th, 2011 at 10:15 PM
Business Bankruptcy Attorney serving Raleigh, NC
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J.M. Cook, P.A.
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When you file Chapter 7, you have to make statement of intention to reaffirm, redeem or surrender. So, you have to file an intention. Other than that, you should avoid reaffirmation if you can. Reaffirming the debt renews your personal liability for the note so there isn't a benefit to you. However, if the lender requires you to reaffirm the debt, then you usually have to (depending on your loan docs).
Answered on Dec 08th, 2011 at 10:15 PM
Chapter 13 Bankruptcy Attorney serving Daphne, AL
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The Hart Firm, LLC
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You will be required to file a Statement of Intentions in a chapter 7 proceeding. That document will state whether you intend on reaffirming, redeeming or surrendering the secured collateral. The Statement of Intentions can be amended if the debtor changes his or her mind.
Answered on Dec 08th, 2011 at 10:13 PM
Daniel James Wilson
I advise my clients not to reaffirm mortgage debt. There is no reason to do so.
Answered on Dec 08th, 2011 at 10:11 PM