Can you reaffirm your mortgage in chap 7???

[253BK]

Hey everyone We are going back and forth with filing ch 7 or 13 and our attorney seems to think we should go with the 7 BUT we are about 16000$ behind in payments.

Reason being we had renters in the house that decided to not pay up! We short sold our other home and now are living in the rental! My question is can we reaffirm the mortgage or would we have to come up with 16K to pay off the mortgage before filing???

[keepmine]

You'll need to be current to file a Chapter 7.

[253BK]

That is what I thought but couldnt find any info online that said BE CURRENT!!! LOL thanks for the input

[JRScott]

You have to be current with payments as the above poster said.

In addition to reaffirm the debt it has to be signed onto by a lawyer (if you file with one) and the judge and cannot unduly burden you.

[PoorGrammyinBK7]

CH 7 and Reaffirmation with Credit Union- what to do???????

Well, we just got 3 reaffirmation agreements in the mail from the credit union for our 2 car loans and our 1st mortgage (with already outdated amounts because we are current in payments). Sent from our lawyers office.

I thought we could just reaffirm if we wanted, but from the atty letter, it looks like if we choose to reaffirm, there may have to be a hearing and he (atty) will charge extra! He almost never recommends reaffirming. But each case is different and for us, it may be better to do it!!

On our statement of intention, the atty wrote "debtor will retain collateral and continue making payments", which we signed and he filed.

Our 341 is next week. Will we have to be more specific by then? Reaffirm or surrender?

We just don't know what to do. We have very good rates and are thinking maybe it would be best to reaffirm at least one car and the condo than have to try and find another car and pay a much higher rate. We owe about what the cars are worth. Were thinking of surrendering one car and reaffirming the newer one, with less miles. BUT, will a credit union cross collateralize and not let us do that? Are we allowed to TALK to the credit union representatives or negotiate a reaffirmation agreement - or does it have to be done thru the lawyer?

The condo 1st mtg has a great rate 5.03% and very low payments, but balloons in a 2 years. We should be able to refi by then, but I guess anything could happen. Plus we have now complicated matters by getting the 2nd at another bank (however we do have 20 years on that at about 6.5%).

If we reaffirm and something bad happened (Death, loss of job, disability, etc) - are we stuck with the debt forever, or would Ch13 still be an option in the future for this debt if needed?

Do we HAVE to reaffirm the 2nd mtg if we do the 1st mtg? Or can we just reaffirm the first?

Is there always a hearing to determine if you would be hardship before you can reaffirm? If so, could we do that alone if we have a lawyer representing us in the Ch7? Or do we have to have him (and pay him extra)

We are 58 years old and it would NOT be easy to move by ourselves - we would have to hire help to move. (More $$$). Our little condo is conveniently located, near doctors, shopping and husband's work. Its nothing great and I am not emotionally attached to it at all, but it might not be so easy to find something to rent and move as some people may think.

I know - a lot of questions - but I would really appreciate some help/thoughts/insight on this.

[BnkrptcyLwyr]

Some things to consider.

How much is the house actually worth and what can it actually be sold for at this time?

How much is owed on the house?

If you owe more than what it's worth, then my usual suggestion (at least here in Michigan with rapidly declining property values) is to just dump the house and start over.

If you are 16,000 behind, then I suggest you *do not* reaffirm. This will mean that you are personally liable again for the whole amount and if the house still ends up going to foreclosure in the future, you will then be liable for a deficiency! OUCH! And you won't be able to file a chapter 7 again for 8 years, and no chapter 13 for 4 years.

You indicated you are not emotionally attached to the condo. Then go rent.

You filed a chapter 7, and I presume that you filed the 7 because you would have had trouble doing a 13 in order to keep the house. That tells me you may not really have the money to keep the condo (but that's a guess).

In general, I would not reaffirm on a house. The reason being that the mortgage companies will usually allow you to make the payments and stay in the house so long as your paying. And I would never reaffirm a second mortgage if there's no equity to support the second mortgage. In fact, some mortgage companies just won't even do reaffirmation agreements.

Also, even if you're behind, banks are becoming much more willing to work out arrangements to keep you in your house nowadays, even with filing bankruptcy, and not entering into a reaffirmation agreement.

With respect to vehicles, I would tell you to reaffirm. Car lenders will often go after the collateral if you don't reaffirm. Not always, but often enough to be a concern.

Finally, if the lender is willing to allow you to make the payments, and keep the collateral and not foreclose, then do it. Because let's say a year from now you find that you cannot make the payments on the condo and you want to walk away. If you didn't sign the reaff agreement, you can do just that. Just walk away with no personal liability. The bank can only recover out of the collateral