Reaffirm scenario

[jason1277]

Good afternoon everyone!

Been lurking for quite a while on here and I have a question I was hoping someone could shed some light on, or perhaps someone has experienced this.

I won't go into our details, but we are filing Ch 7 next week. There is a possibility that one of our lenders will force the issue of a reaffirm. We are showing just a little negative each month and I have a feeling our lawyer will refuse to sign for that reason.

What exactly happens if a lender forces the issue and threatens a foreclosure if we don't sign? Can they do that? And if they can and the lawyer refuses to sign, am I pretty much screwed?

[lrprn]

There are several important "ifs" here...

IF the lender requires a reaffirmation, and IF your attorney does not approve the reaffirmation, and IF you don't live in a state that won't allow repossession if the debtor is on time with payments....

If all three "ifs" are true in your case, then you have two choices -

1. Take the chance that the lender is bluffing and really will not repossess as long as you are paying on time after your case closes, and choose not to sign. The vast majority of lenders will not repossess in these circumstances even if you don't reaffirm.

2. Sign the reaffirmation agreement knowing that this is your one chance in the next eight years to get out from under an upside down asset where you owe more than the asset is worth. If you reaffirm and something goes wrong later (major illness, job loss, etc) you're stuck paying - no out.

Only you can make the choice which is best in your circumstances.

[jason1277]

Thanks

Does the same apply to a house as well?

But if my lawyer refuses to sign, how can I submit the reaffirm if forced to do so by a lender?

[lrprn]

Does the same apply to a house as well?

Yes, the same applies to a house or any other asset that the lender demands a reaffirmation agreement be signed.

But if my lawyer refuses to sign, how can I submit the reaffirm if forced to do so by a lender?

If your lawyer refuses to sign, it's because he/she believes that it is not in your best interests to reaffirm the mortgage and that you are putting yourselves at significant financial risk by doing so.

If your lawyer refuses, then you may have to go in front of the judge to convince him/her that you are willing and able to reaffirm the loan without risk to yourselves. Depending on your financial circumstances, the judge may not allow the reaffirmation either. If that's the case, then you have to try a ride-through and hope for the best.

Frankly given the poor housing market and overall US financial recession right now, you won't be taking much of a risk not reaffirming your mortgage or car.