Reaffirmation - Maybe, Maybe Not...

[lillaimof2kids]

Atty's paralegal called today for me to come in and sign our reaffirmation papers on our home equity loan and our car loan. Well we are letting the car go, so we won't sign those papers. But our bank our home loan is thru hasn't replied about reaffirming on the house. So, of course I won't reaffirm on the equity line if the bank won't reaffirm on the house loan.

Should I be worried about this?? I really want to keep our house! I can't find a rental house for the price our mortgage is, plus the house will be paid off in 15 years.

Thanks!

[laurannm]

From everything I have read and been told by lawyers who we consulted with, you should have no problems keeping your house if you don't reaffirm, as long as you remain current on your mortgage(s).

[deafbroke]

Reaffirmation is the biggest mistake a person can make in bankruptcy. Why? Who does it benefit? You? NO? why not? Because if you reaffirm and later end up getting foreclosed on, the mortgage company WILL go after you for any difference in the sale of the home at foreclosure and what is owed on it, not might, but they WILL and because you signed the reaffirmation agreement, you will HAVE to pay. Homes, Cars, Loans, CC's, whatever, NEVER, NEVER ,NEVER, reaffirm. You can still stay in the house as long as you're current with the payments. Then, years from now, if the totally unexpected happens, you can walk away from it and not be liable for anything.

DB

[lillaimof2kids]

So as long as I'm current, which I always have been, they can't do anything? We have improvements we need to make on our house (basement flooded a couple weeks ago). I definately don't want to put any money in our house if the bank could step in.
Thanks for the info!

[joab]

Reaffirmation can make sense if you have equity in your car and you don't want to hassle with a possible repo and losing some of that equity if they wholesale your car for less than you think it's worth.

But in the current market, at least in southern CA, a bank repo is very unlikely as long as you keep making your payments on time.

[b_girl]

Whether to re-affirm or not is such a hard question to answer when you're afraid of possibly losing your home. But deafbroke is right...re-affirming is not in your best interests. Should anything unforeseen happen to you or your family during the first few years following bankruptcy and you were financially devastated, you could end up losing your home anyway AND be stuck with the bill. That's how I finally convinced my spouse that we should definitely NOT re-affirm our home and second mortgage. We too plan on keeping our home and are still in the process of re-modeling it, so re-affirmation seemed to be the thing to do....but when I started playing out all the possible (and plausible) disaster scenarios in my head--you know, all the things that can and will go wrong when you need it the least--we just had to say no way to the re-affirmation. We've never had the best of luck, so the odds of something horrible happening in our lives in the next few years was too risky and we decided we just couldn't take the chance. Good luck in your decision!

[AngelinaCatHub]

So as long as I'm current, which I always have been, they can't do anything? We have improvements we need to make on our house (basement flooded a couple weeks ago). I definately don't want to put any money in our house if the bank could step in.
Thanks for the info!

Hey "lila'", so it is a repair. Probably a sump pump failed. But if you love the house and have a lot in this, think of what a moving expense would cost if you let it go. That would purchase a repair of whatever happened in the basement. Trust me, fifteen years go by fast. Also, whenever you get your bk and have a bit of extra money, if you make a half payment more every month, you will lessen that time by more than 50%. "Hub

[lillaimof2kids]

Thanks everyone! Yes, after our mortgage and equity line, we have $10,000 equity in our home. I guess that's what I worry about not reaffirming. If the bank don't want to reaffirm I'll just ride it thru.

Hub - Our sump pump & back up sump pump were both working. We had 5+ inches of rain and our drains in the basement backed up + our drainage in the back of the house clogged, so we had water pouring thru our cellar doors into our basement. Had about 4" of standing water in the basement, which is/was finished. We also got hit by lightning. It blew our GFI to our spa and our swimming pool pump. We're currently in the process of redigging all our drainage outside. Such a mess. All in all, we had $8400 in damage. We had to make an insurance claim on it all. Lots of work to do. But we're doing it all ourselves, so we can save some of the insurance money.

[deafbroke]

Thanks everyone! Yes, after our mortgage and equity line, we have $10,000 equity in our home. I guess that's what I worry about not reaffirming. If the bank don't want to reaffirm I'll just ride it thru.

Hub - Our sump pump & back up sump pump were both working. We had 5+ inches of rain and our drains in the basement backed up + our drainage in the back of the house clogged, so we had water pouring thru our cellar doors into our basement. Had about 4" of standing water in the basement, which is/was finished. We also got hit by lightning. It blew our GFI to our spa and our swimming pool pump. We're currently in the process of redigging all our drainage outside. Such a mess. All in all, we had $8400 in damage. We had to make an insurance claim on it all. Lots of work to do. But we're doing it all ourselves, so we can save some of the insurance money.

The banks will always want you to reaffirm. Equity or not you can stil lstay in the house without reaffirming. Keep the payments current and you have no problem. Look at it this way, Even if you do reaffirm, the bank will stil ltake the house if you get behind on payments. Reaffirming just allows them to go after you for the difference between the foreclosure sale and what's owed on the house and you can't file cpt 7 again for at least 7 years so you have no way out by reaffirming. Best thing to do is not reaffirm, keep payments current, and fix what needs to be fixed when you can afford it, then if something bad does happen you are not liable after foreclosure. Again, reaffirming does not benefit the debtor at all.

DB

[PoorGrammyinBK7]

Reaffirming or not

I am beginning to come around to deafbroke's way of thinking. For one thing, my attorney says he has done hundreds of BK's with the unwritten "4th option" - debtor will retain collateral and continue making payments...
and has not had anyone yet to have their home repossessed who has done this. Cars may be another issue since the new law specifically gives the 3 options for "personal property". But even with cars, he has not had any repo'd when payments were current, even though no reaffirmation was signed.

We have the unique (or maybe not so unique?) problem of our 1st mortgage and both our car loans being with the same lender - a very large credit union. We also have a VISA with them, but it has a zero balance. However, since we paid it off about 73 days from filing, along with 2 other credit cards - this could be a problem if there is cross collateralization, which there probably is. I guess the trustee could get it back. Still not sure how they could call these payments a "preference" since we paid all 3 of them off, We did have one small VISA (less than $500) that my DH paid $100 on (I did not know about that one - my DH paid for some meds with it - but it was not neglected - was overpaid too).

2nd mortgage is a HELOC at a (different) bank. Because of devaluation of real estate we have little to no equity now. So, I want to keep the condo, but if things get bad or a natural disaster should hit our area - well it can go back if need be.

We'll find something. We are not going to be owned by our "stuff" any more!

[lillaimof2kids]

deafbroke - That's perfectly worded!!! I won't be reaffirming anything, just to be safe in the future!

[lillaimof2kids]

Grammy, I'm starting to not only understand deafbroke, but agree with him. As for our car, I was happy to let that go!! We were $7000 in the hole, it's an SUV - only gets 16 mpg. My work is leasing me a Honda Civic, it gets 30 mpg. (It helps that I work for my parents, so the bus. pays for my car, then I'll start paying my parents after we're discharged.) This arrangement is actually saving us over $300/mo.!!!!

[estreeter34]

I am agreeing with deafbroke 100% on this! Our attorney told us the same thing...Basically stay current and drive the car until it is paid for and you have a clear title without reaffirming, but also have the option to call the lender and say "come get your property". We are driving an Astro van that we are waaaay in the hole on and are looking to find a more fuel efficient vehicle. Filing in about a week and will drive the van and make payments until we can find the right car at the right price! Paying cash only for everything except maybe another house one day now!

[PoorGrammyinBK7]

[lillaimof2kids]

I have a phone conference with our atty. on the 29th about this. We'll see what she has to say. I still don't want to sign anything. I just want to ride it out. In no way do I want to lose my house. We have an interest rate of 5.5% with about 10 yrs. left, give or take a yr. We had quite a bit of storm damage a few weeks ago, we're getting ready to repair quite a bit of damage.