question -to reaffirm or not.

[saucey]

hey guys!first i just want to say say thanks to everyone for all your help so far.its nice to know im not going through this alone.what a nightmare this whole process is.my question is about reaffirming the mortgage and car.when we first talked to our lawyer about doing a chapter 7 he told me not to worry were not gonna lose our house and car.he never said anything about reaffirming.if it wasnt for these boards i wouldnt have a clue.i was hoping someone could explain the whole reaffirming process.after all is said and done we will still own the house?can we never be late on a payment again?(we sometimes pay after the grace period but not past the 30 days)will i have to live in constant fear of losing our house for years to come?

[razorguns]

you have to reaffirm. You can't just wipe away a mortgage as a debt, and then keep the house for free. Reaffirming ensures the bank can't force a foreclosure.

r

[gacreditguy]

hey guys!first i just want to say say thanks to everyone for all your help so far.its nice to know im not going through this alone.what a nightmare this whole process is.my question is about reaffirming the mortgage and car.when we first talked to our lawyer about doing a chapter 7 he told me not to worry were not gonna lose our house and car.he never said anything about reaffirming.if it wasnt for these boards i wouldnt have a clue.i was hoping someone could explain the whole reaffirming process.after all is said and done we will still own the house?can we never be late on a payment again?(we sometimes pay after the grace period but not past the 30 days)will i have to live in constant fear of losing our house for years to come?

First and foremost, WELCOME TO THE BOARD!!

Many of us felt the same way (alone) when we were starting the process. However, after coming here, we found a family of caring people who KNOW what they are talking about..

My Attorney told me the same thing in regards to my mortgage and automobile. I would not be loosing them but I would need to file a reaffirmation agreement with each lienholder to keep them under the new law.

Here is what is going to happen.. Your Attorney (should) contact the lienholder for both your mortgage and automobile and they in return will forward a reaffirmation agreement that your Attorney will review, confirm that there will be no financial hardship because of said agreement and he/she will then sign it.

Your Attorney will then forward the reaffirmation agreement over to you for review and signature. Once you have signed it, you will mail it back to the lienholder and they in return will file it with the BK Court (at least that is how it went with both of my reaffirmations).

Once the reaffirmation agreement(s) is/are filed with the BK Court it is basically like you never filed bankruptcy on those particular debts. You are once again legally and totally responsible for those debts in their entirety.

As for your mortgage, if you are pleased with your home and can afford to stay in it post BK, by all means sign the reaffirmation. Yes, it protects the lienholder, but in return it protects you by keeping your rights as well!

Now the automobile may be a different story.. If you owe less than what the vehicle is worth, you are in a pretty good situation. However, IF you owe more on that vehicle than it is worth (negative equity out the wazoo), there are a few other options.. Redeeming and simply not reaffirming..

---Redeeming: You would need to contact your Attorney or do a little research here for exact details. But you can offer less than the vehicles worth and hope they bite.

---Not Reaffirming: They (likely) will not come and get the vehicle as long as you remain current on payments. However, there is no gaurantee on this as it is totally up to the lender. There are pro's and con's to this option as well. Pro's, you keep the car and continue paying, should you decide you do not want the car you can simply contact the lienholder and turn it in and you are not responsible for any deficiency in the loan. Con's it never reports on your credit reports again, you no longer receive a statement in the mail, if you are late one day they can come get it, you loose your rights (as I discussed above).

I reaffirmed both my mortgage and my automobile and after careful consideration, I decided to rescind the automobile reaffirmation as it was not a feasible financial decision to keep a car with a loan bal of $14.5k and a car worth of only $9.5k. I simply asked my Attorney to rescind the reaffirmation with the autos lienholder and contacted them and advised them I was turning in the vehicle. They came and got it and I have not missed the "negative equity mobile" since.

In reply to your last question regarding living in fear again about your mortgage, the answer is NO! If you reaffirm the mortgage you will be placed back into the good graces with your mortgage company. Most mortgage companies understand that crap happens to people, mine did! They worked with me and called me to let me know that my account is no longer in the BK Dept. and thanked me for my business with them.

Good luck in your decisions and just know we all are here for you!

[lrprn]

hey guys!first i just want to say say thanks to everyone for all your help so far.its nice to know im not going through this alone.what a nightmare this whole process is.my question is about reaffirming the mortgage and car.when we first talked to our lawyer about doing a chapter 7 he told me not to worry were not gonna lose our house and car.he never said anything about reaffirming.if it wasnt for these boards i wouldnt have a clue.i was hoping someone could explain the whole reaffirming process.after all is said and done we will still own the house?can we never be late on a payment again?(we sometimes pay after the grace period but not past the 30 days)will i have to live in constant fear of losing our house for years to come?

Our Ch 13 lawyer advised us that under the new law, it was best NOT to reaffirm our mortgages or our cars, and we have not. As long as we make our payments on time, there's nothing the lenders can do. Reaffirming a debt makes it like you've never filed bankruptcy - it makes the debt non-dischargeable, even when it could have been discharged.

There are advantages and disadvantages to both sides of reaffirmation. For an objective discussion about whether to agree to reaffirmation or not, visit:
http://www.wvs.state.wv.us/wvag/faq/...egalrights.htm (scroll down to What Is Reaffirmation? and sections following)

http://answers.google.com/answers/threadview?id=138004

http://www.moranlaw.net/secured7.htm

http://mauilaw.com/article5.htm

Hope this helps!

[saucey]

thanks so much everyone!you guys are great!when all of this is over and it hopfully all works out good, i look forward to actually sleeping at night.

[tiredofit]

here is my experience: long.....

car:

I bought a brand new car 2 mos before filing bk chp 7 with the intention of keeping said car and reaffirming it. Car in my book, is not all that great as people try to make you think (a 2006 honda civic). My other car, a 2002 xterra, has about 5,500 left on the loan and it is worth like 10k. I reaffirmed both at first thinking I didn't want to lose my only car (the xterra goes to the ex once it is paid off by me). After much consideration and research and me bugging my law office (always speak to your attorney not one of his/her assistants!!!!! they give bad info sometimes) I decided to rescind the agreement for the honda. The new law somewhat elimates what is called "ride through" or aka the fourth option in some circuit courts. Ride through means that you continue to make payments, not reaffirm, and you keep the car. The new law also has a clause where it refers to a ipso facto clause in your original agreement you signed with the lender referring to filing bankruptcy as a default. Being that this clause is mentioned in the bk law clause, itsomewhat implies that the you can not reaffirm AND file bankruptcy AND be late on payments or they can repo the car. It also implies that just because you file bankruptcy and do not reaffirm, the lender cannot repo unless you break the original terms of the contract. In my case, I live in the 4th circuit and there is a majority of circuits (5 out of 9) who ruled that ride though under the old law was a fine ooption for the debtor. My agreement also didn't have that clause regarding a bankruptcy as default so that is what saves me even more. I am 90% sure the lender will not repo because a) i have never been late in fact I have consistantly paid 3 weeks ahead of time since march and b) they'd rather not repo a car and turn around and sell it for a loss. Now down the road, when I have equity? Who knows. I would think if they repo'd it in 2 years, they would be in violation of some law and it would be fraudulent. Not sure... I figure, I save a few-5k$ in the bank and leave it there (almost there) and then if I ever go to the car and it's gone, well, I just go buy an older car for 3-5k outright. There are lots of good cars out there in that range......

house;
decided to surrender because I owed more than it was worth, or so i thought, and it was 40 miles from my job. The house was on the market before i filed, and no hits. I finally got somebody interested and a buyer's contract at the 11th hour, right before the auction and the mortgage company HAD to terminate the auction because the violated the automatic stay. They never filed a motion for relief!!! So now, unless something has changed on the buyer's end, I can end up walking away from closing with between $2,000-$4,000 depending upon if the lender doesn't charge me attorney fees, which I believe they cannot since all actions taken while the stay is in place are voidable! I've gotten conflicting payoff from the lender and the foreclusre atty, with the difference being the atty fees.....We shall see.....

summary:
I think you can probably not reaffirm the car, because a car is never really an appreciating asset and the bank wants you to pay them, they don't want a loss. Your house? If you owe alot less than it's worth, and you like living there reaffirm. It's an asset. Would you rather be paying rent like me with no tax advantage??? The bank may kick you out if you don't BUT I'm not sure because if you note doesn't mention anything about bankruptcy as a default, you may be in the clear....

[Interlaw]

you have to reaffirm. You can't just wipe away a mortgage as a debt, and then keep the house for free. Reaffirming ensures the bank can't force a foreclosure.

r

This is incorrect. You are *not* required to reaffirm a mortgage debt to keep a house, so long as payments are kept current.

Brett Weiss

[LostOne0069]

This is incorrect. You are *not* required to reaffirm a mortgage debt to keep a house, so long as payments are kept current.

I thought the new law changed this? My attorney is telling me that if I don't reaffirm my car (which he is advising me NOT to do) that the bank can file for relief from stay and, after it is granted, come get it.... whether or NOT I am current on the payments.

[SinkingFast]

I thought the new law changed this? My attorney is telling me that if I don't reaffirm my car (which he is advising me NOT to do) that the bank can file for relief from stay and, after it is granted, come get it.... whether or NOT I am current on the payments.

This is a point of confusion, Lost. Reference this article/demonstration of "arguements":

http://abiworld.net/newsletter/consu...3num3/car.html

The New Law requires Filers to Reaffirm, Redeem, or Surrender Secured Assets. Filers must state their intent within 30 days of the first scheduled Meeting of the Creditors. If after 45 days, the Debtor/Filer has not Reaffirmed or Redeemed the property, then a Motion to Lift Stay can be granted.

Some Districts are not allowing Filers to "Ride Thru" while other Districts are allowing Filers to keep assets and continue paying without Reaffirmation or Redemption.

As noted by people posting here, how this part of the Law is handled really depends on where you live. Local custom seems to prevail on this particular point.

[saucey]

This is a point of confusion, Lost. Reference this article/demonstration of "arguements":

http://abiworld.net/newsletter/consu...3num3/car.html

The New Law requires Filers to Reaffirm, Redeem, or Surrender Secured Assets. Filers must state their intent within 30 days of the first scheduled Meeting of the Creditors. If after 45 days, the Debtor/Filer has not Reaffirmed or Redeemed the property, then a Motion to Lift Stay can be granted.

Some Districts are not allowing Filers to "Ride Thru" while other Districts are allowing Filers to keep assets and continue paying without Reaffirmation or Redemption.

As noted by people posting here, how this part of the Law is handled really depends on where you live. Local custom seems to prevail on this particular point.

hi sinkingfast!do you mean you need to state your intent 30 days before your 341 or you have 30 days after the 341 to reaffirm.

[Interlaw]

This is a point of confusion, Lost. Reference this article/demonstration of "arguements":

http://abiworld.net/newsletter/consu...3num3/car.html

The New Law requires Filers to Reaffirm, Redeem, or Surrender Secured Assets. Filers must state their intent within 30 days of the first scheduled Meeting of the Creditors. If after 45 days, the Debtor/Filer has not Reaffirmed or Redeemed the property, then a Motion to Lift Stay can be granted.

Some Districts are not allowing Filers to "Ride Thru" while other Districts are allowing Filers to keep assets and continue paying without Reaffirmation or Redemption.

As noted by people posting here, how this part of the Law is handled really depends on where you live. Local custom seems to prevail on this particular point.

The requirement to reaffirm, redeem or surrender applies only to debts secured by personal property (such as cars), not to debts secured by real estate. 11 U.S.C. 521(a)(6).

And even if you don't reaffirm your car, there is some question as to whether it means anything if the payments are kept current. Your state's laws may prohibit repossession except in the case of a payment or insurance default.

If it's a secured item such as a refrigerator, TV or computer, I almost always advise my clients not to reaffirm, because it generally is not cost-effective for the creditor to bring a replevin action after discharge to obtain possession of the item.