Will possibly be forced to reaffirm?

[2live]

I will be filing in the next week and while I did list the car and home equity loan on the paperwork, I also noted beside them that I just wanted to continue paying as usual, not to reaffirm, surrender or redeem as were the options given. Never been late on either loan and only have 2yrs left on car with 260.00 payment.

Well I just got off the phone with the credit union who holds both notes and they said I would HAVE to sign reaffirmation papers that in her 15 years of being with this credit union that's the way they have always done it. Then called the attorneys office and spoke with his paralegal who said yes, I would have to sign. When I questioned it saying why can't I just continue paying as usual since I haven't breached the contract, she said legally once you file chapter 7 with no reaffirmation that they could take what's theirs and not necessarily wait until you breach the contract with missed payments. She said when I come in to sign the paperwork on filing day to discuss with my attorney who wasn't in at the time.

So is this a credit union thing, Texas thing or what? I mean I would reaffirm if I HAD to but then if my health declines any more and I pass away, wouldn't my estate have to pay these out??

Also, if I do have to sign does it mean I can renegotiate the terms of each contract?

Ooops, update....lawyer just called me and said NO, I DIDN"T HAVE TO reaffirm anything!! And he explained "they (banks, cu's) REALLY WANT you to reaffirm so they will legallly have 'a person' to go after in case you later chose to walk away from the property in question". Yes they take the property but they want to be able to sue you for the rest thus the reaffirmation. He also said as long as you know you will not miss any payments then you will not have to reaffirm. Once I were to miss even one, then they can claim the property. He added he does not like reaffirmations.

So he's on the up and up heh??

[StartingOver08]

Yes, your attorney is on the up and up! Good job!

The paralegal is just that....she's not an attorney and can't give legal advise.
Don't reaffirm. You are thinking about it the right way.

[2live]

So then help me with this: If I am able --even with just disability checks--able to make the payments with no problem, do I say "lets make a deal" and see what they offer me if I will reaffirm? Or just don't sign at all. In addition, this is my last house, don't see myself moving at all and already lost my job. so I'm at the very bottom of what I will ever make and can still make the payments ,no problem. So if my thinking is if they were to offer me a sweeter deal I may just sign anyway.

Give me the scenarios where reaffirming would still be a dumb choice so I can decide before filing next week. Thanks.

[StartingOver08]

What you want to do is to OFFER to reaffirm and you do that in your statement of intentions in the petition.

You do not want to sign the vehicle reaffirmation UNLESS the lender is willing to make the new reaffirmation very attractive to you (either in the form of reduced principal, reduced interest etc). You are better off with a ride through - you just keep making the payments on time, no reaffirmation is signed by you.

As to the HELOC, I would not reaffirm it in this market at all. You will still have the lien on the house from the HELOC so you could continue to pay after your BK. But if you should have to walk away from the house they will not come after you for the deficiency.
Do you have equity in the house (real equity)? If you have lots of real equity in the house - you might want to sign a reaffirmation, other than that it is not good for you at all.

Another thing - why should you have to sign the reaffirmation agreement on the date of filing? There is NO good reason for you to do so. In fact there are many reasons to not sign one at all, but if you consider actually signing a reaffirmation, you have 60 days (I believe the time is right) after your filing, to sign and file with the court. All the parties have to sign (you, your attorney and your lender) and it must be filed with the court to have an actual reaffirmation agreement. If your attorney will not sign, then the judge must approve. But the judge may decide its a hardship for you and not approve it. Another good reason for a ride through

As to the CU saying this is the way they have always done it - so? We are in unprecedented economic times - so things have to be done differently now.

[2live]

What you want to do is to OFFER to reaffirm and you do that in your statement of intentions in the petition.

Oh, so this is what I do at filing time next week...just offer to reaffirm. Ok, thanks!

You do not want to sign the vehicle reaffirmation UNLESS the lender is willing to make the new reaffirmation very attractive to you (either in the form of reduced principal, reduced interest etc). You are better off with a ride through - you just keep making the payments on time, no reaffirmation is signed by you.

I was just thinking maybe they would offer a lower interest. The car has only 61000 miles and low payments for less than 24 months left, so I wouldn't give that up anyway.

As to the HELOC, I would not reaffirm it in this market at all. You will still have the lien on the house from the HELOC so you could continue to pay after your BK. But if you should have to walk away from the house they will not come after you for the deficiency.
Do you have equity in the house (real equity)? If you have lots of real equity in the house - you might want to sign a reaffirmation, other than that it is not good for you at all.

About 20,000 equity and the home equity loan is the only lien on the house as it was paid in full before that.

Another thing - why should you have to sign the reaffirmation agreement on the date of filing? There is NO good reason for you to do so. In fact there are many reasons to not sign one at all, but if you consider actually signing a reaffirmation, you have 60 days (I believe the time is right) after your filing, to sign and file with the court. All the parties have to sign (you, your attorney and your lender) and it must be filed with the court to have an actual reaffirmation agreement. If your attorney will not sign, then the judge must approve. But the judge may decide its a hardship for you and not approve it. Another good reason for a ride through

I really didn't know when the reaffirm takes place. So when I meet with the lawyer to sign the paperwork and he files--next week-- then after that the cu gets the info and sends reaff. paperwork to my lawyer to see if I'll sign? Those papers would have the terms of the new agreement on them? ok, thanks for your help startingover, you are awesome and PATIENT for helping me and others understand this stuff.

[StartingOver08]

Your welcome! We are all learning as we go - just some of us are a little ahead of you on the Bk process!