No asset Chap 7. Mortgage reaffirm?

[feelnbetter]

Someone help me understand this please!
I am a no asset chapter 7 case. One home mortgage with Chase Home Finance. Not reaffirming as advised by my attorney.
I have looked all over this forum and talked with my attorney's office and as I understand it this is the deal:

If I do not reaffirm my mortgage and continue to make full monthly payment on time I can stay in my house until I either:
1. Choose to quit making monthly payments, live "rent free" until someone tells me to get out and let it go into foreclosure, then be completely not responsible for anything (other than insurance until I leave)... or

2. Keep making full monthly payment until I decide to sell the house. Put it on the market, sell it and if there is any money left over ( I am assuming any money beyond the balance that was due on my BK filing date?) I pay Chase Home Finance that balance and keep whatever could be left over? Then be completely not responsible for anything?

Perhaps I misunderstood what I have read and been told but this sounds way too good to be true!!! Like some kind of huge gift! I am guessing I'm just hoping this is the way it works- can someone explain this to me? Am I the only person who feels this really is too good to be true because both options seem like a pretty good deal. Only downside I see is losing equity but in our neighborhood giving up such a small amount of money will be well worth getting out in about 2 years. Thanks again for your help!

[okiebk09]

you are right. we were just discharged and also have a home mortgage through chase home finance. we initially put on our petition to reaffirm. However, Chase did not get the paperwork done in time before we were discharged so we did not reaffirm and they are fine with that. We continue to make the monthly payment via usps mail. We just mail a check every month. you do need to call Chase after discharge and get the correct address to mail the payment to. It is different than the regular payment address. Isn't it wonderful? We are doing so much better now that we took this step. Even better knowing we can walk away from this hous eif we need to and there is nothing they can do about it.

[feelnbetter]

Thanks so much for the payment address info- didn't know that.
This really just seems like a great gift to have the option of walking away whenever I want. I feel even better now!

[BnkrptcyLwyr]

The only real hiccup to not reaffirming is that your current mortgage company will not refinance.

Of course, that doesn't mean you can't get a different mortgage company to refinance (if they will).

[CCCrazy]

You say that if you do not reaffirm first or second mortgages your current mortgage company will not refinance - which means refinancing the SAME loan, correct?

But if you do not reaffirm either can they MODIFY the loan? which means it is a totally different loan, correct? Please let me know...my discharge date is end of June and I was hoping to modify these loans - refinancing wasn't an option anyway since i'm so far underwater. Thanks for any input.

[moneytrouble]

I am not an expert, this is my opinion.
Let's say you lose your job down the road, even though you are not legally liable for payments anymore, the bank will foreclose on you and you will have another mark on your credit in another calendar year. My credit was already marked with a big loser "L" with Chapter 7, so my opinion was why take the chance with foreclosure down the road. You filed Chapter 7 to get rid of your debt, even though you are not legally liable, the home is still over your head. The state I live in is in disrepair, you could call it Shock and Awe, and I expect our unemployment to reach 20%(depression levels), by years end.

[momof3b1g]

I am not an expert, this is my opinion.
Let's say you lose your job down the road, even though you are not legally liable for payments anymore, the bank will foreclose on you and you will have another mark on your credit in another calendar year. My credit was already marked with a big loser "L" with Chapter 7, so my opinion was why take the chance with foreclosure down the road. You filed Chapter 7 to get rid of your debt, even though you are not legally liable, the home is still over your head. The state I live in is in disrepair, you could call it Shock and Awe, and I expect our unemployment to reach 20%(depression levels), by years end.

If it was included in the bk. You will not have the foreclosure on your CR. Thats if you didn't reaffirm.

[DebtEnder]

Aye if you get foreclosed on right after discharged or 10 years later, if you never signed another loan document or re-affirm agreement all they can do is keep the loan as IIB on your credit from whenever you were discharged. If they do update your credit after they foreclose then feel free to get an attorney to sue the pants off them.

[moneytrouble]

Thanks for clarification! After reading some other posts on here, I was under the impression that the foreclosure would be listed separately!!!

[2xBK]

Keep in mind there is a downside to not reaffirming a house or vehicle. At any point after discharge (a month later or years later) the mortgage company or auto finance company can foreclose or repossess without advance notice and you'll have no recourse, except to pay the lien in full to keep the property. Typically if you make payments on time they'll leave you alone but you'll always have this hanging over your head. I have equity in my truck, but upside down on the house. I doubt it would benefit the mortgage company to foreclose 2 years from now if I'm making payment but what if Chase Auto Finance decides to repossess the truck because I owe less than it's worth, especially given the fact that I'll be including several Chase CC's in my BK7? So I may reaffirm the truck but not the house.

[mgmadara]

Keep in mind there is a downside to not reaffirming a house or vehicle. At any point after discharge (a month later or years later) the mortgage company or auto finance company can foreclose or repossess without advance notice and you'll have no recourse, except to pay the lien in full to keep the property.

I have been reading this forum for many years and I have never seen a post where a person who didn't reaffirm lost their house or car when they were current on payments. The lenders want your money not your car or house. We didn't reaffirm our house or our car and I have never felt that we made the wrong decision, especially in this economy. It is comforting to know that if our income is reduced and we can no longer make our mortgage payment that we can walk away from our house and we wouldn't be responsible for the deficiency balance.

[laurannm]

Keep in mind there is a downside to not reaffirming a house or vehicle. At any point after discharge (a month later or years later) the mortgage company or auto finance company can foreclose or repossess without advance notice and you'll have no recourse, except to pay the lien in full to keep the property. Typically if you make payments on time they'll leave you alone but you'll always have this hanging over your head. I have equity in my truck, but upside down on the house. I doubt it would benefit the mortgage company to foreclose 2 years from now if I'm making payment but what if Chase Auto Finance decides to repossess the truck because I owe less than it's worth, especially given the fact that I'll be including several Chase CC's in my BK7? So I may reaffirm the truck but not the house.

This MAY be only PARTIALLY correct. I'm not 100% sure if the same concept applies with mortgages (although I think it does), but with a vehicle you are protected by state laws after your BK is over, regardless if you reaffirm. In most states, as long as you remain current, a lender cannot reposes your vehicle.

[laurannm]

I have been reading this forum for many years and I have never seen a post where a person who didn't reaffirm lost their house or car when they were current on payments. The lenders want your money not your car or house. We didn't reaffirm our house or our car and I have never felt that we made the wrong decision, especially in this economy. It is comforting to know that if our income is reduced and we can no longer make our mortgage payment that we can walk away from our house and we wouldn't be responsible for the deficiency balance.

Agreed, we are in the exact same boat. We wrestled with reaffirm vs not reaffirming, but we after consulting with the multiple lawyers, this forum and other sites, we knew reaffirming was the wrong decision. Matter of fact, neither our mortgage company or Chase Auto Finance even bothered sending us reaffirm agreements.

[runforcover]

Amazing

This thread is amazing. I have been struggling with just when to file ch7. Since the economy is under socialist rule, the future looks troubling, to say the least. I did not want to reaffirm my car until things started getting better, if they do. So, to hear that reaffirmation is not required and I can keep my car by staying current is interesting. Are there any more big gun moderators willing to comment?

[willbfree]

Does it change the advice if you have collateral in your home? I was thinking about not signing the reaffirmation papers and just continuing to pay on the mortgage loan. The thought of them foreclosing when we are current makes me uneasy about not signing. Advice?