Mortgage questions

[Debtnogood]

We indicated on our petition that we will reaffirm our mortgage and now I'm thinking that may not be a good idea at all. Our house payments are current. But our home needs lots of work. And we don't have the money to fix it the way it needs. So now I'm thinking we just need to let it go. But, where are we going to live? There is like nothing for rent in my area that I can find. So not sure what to do. My attorney says if we change our mind we don't have to sign the reaffirmation agreement, but if we do that how long before we have to be out of our home? Anyone with experience with this?

[justbroke]

If you are paying your bill on time, then there is no way a mortgage creditor could foreclose (unless you breached something else, like not maintaining hazard insurance or paying the taxes). That's the nice thing about not signing a reaffirmation agreement, is that you don't have personal liability and can walk at any time.

So, how long? Probably as long as you keep paying, and then, at the time you stop paying, any foreclosure would be based on your State's foreclosure laws. It could be forever (at least until the time you pay off your mortgage).

(Now there were some specific issues in Florida regarding Trustees trying to do carve outs and trying to sell the homes themselves, but I haven't heard much about this lately.)

[Debtnogood]

Thanks for the reply. So it sounds like I don't need to sign a reaffirmation agreement even if we decide to stay for a while. The main thing is I don't want to be stuck with a house that we can't fix or repair the way it needs. It just seems too good to be true to just pay and not have to reaffirm anything. So what do I do about saying I want to reaffirm it on my petition?

[justbroke]

I will say that, from what I've seen here and have done myself, signing a reaffirmation agreement is like asking “Why... would someone say to a creditor ‘despite my bk I will pay you and if I don’t you can sue the crap out of me' ?" (written by despritfreya; see below)

By not signing, you are no longer personally responsible for repayment. As I wrote, in just about every State, a foreclosure can only happen due to a breach in the mortgage (missed payments, lack of insurance, not paying taxes, to name the ones that I can recall).

Now, if you're filing with an attorney, then you would ask the attorney how to list the home on the Statement of Intentions and whether you want to check "redeem", "reaffirm", or "surrender". In some cases, people chose a fourth unlisted option known as "stay and pay". Whether that will pass in your District is too much of a deep (legal) question to answer. There are a variety of strategies surrounding how to do this and each may or may not play to your favor.

Check out this thread written by one of our senior and regular members (who practices bankruptcy law)... http://www.bkforum.com/forum/before-...ffirm+mortgage

[spidge]

Some other questions to consider;
What is your payment compared to rentals in the area?
Will you loose the ability to itemize and loose out on tax benefits?
Is the house really in that bad a shape or do you think you absolutely need to have a perfect home?

I started to doubt my position on this subject as our home is over 50 years old and "I would like" to do many repairs and improvements. I thought we might let it go, but to stay in the area would cost us about $700 a month more and we would loose the tax break resulting in even higher expenses. We would like to repair or improve so many things, but we would rather have a house and cars in need of repair from time to time than be a debt slave again. Things go without repair from time to time and we deal with it and redefine our priorities based on those needs.

Maybe retirement is closer for me than you, but it sure makes me consider every mover so very carefully. That said no matter your age consider it now and plan.

[Debtnogood]

Thanks for all the info! It has been so helpful! Lots to think about. Like I said, we put reaffirm on our schedules, but I'm doubting that decision. And to the repairs of our home, it's not just cosmetic. I'm talking the roof is falling apart, shingles half gone from one side and insurance won't pay for it. So that's at least 8-10k from the quotes we got. We have a broken window, a couple of external doors that have rot from water damage from our gutters not working properly. We need gutters too. Our garage door is broken. And I think we have termites. We have treated for them before but haven't been able to maintain the contract. So yeah, our house is a wreck. If we had funds to fix it, I would stay just for the location. As far as rent vs mortgage it's about the same as far as payments. But problem is rental houses are hard to come by in the area we live. But from the advice I've gotten here and the information I've now read, it sounds like to reaffirm would be a disaster. So at the very least I think we might be better off to stay and pay until we can find a good rental. Do we have to tell the trustee this is what we intend since it is on our intention to reaffirm? Our meeting is coming up, so I feel like we have to know what to say to the trustee if they ask. I guess we need to be talking back to our lawyer about this.

[LadyInTheRed]

Your statement of intentions is what you intended to do at the time you filed. If you change your mind, you simply do not sign a reaffirmation agreement. Ask your attorney, but he will probably say that if the trustee asks, you should say you decided not to reaffirm, but will continue to pay the mortgage and stay in your home. After your BK, you can decide whether to make repairs or not and whether to stay in the home or walk away. If you decide to walk away, stop making mortgage payments. At that point, you can stay until title passes to a new owner in foreclosure. If you decide to stay, you continue to make mortgage payments until the mortgage is paid in full or you sell the house, just like you would do if you never filed BK.