Reaffirmation Hearing

[Keebler]

Interesting, in looking at the court calendar for the day of my reaffirmation hearing - I see approximately 7 reaff. hearings scheduled in the course of 30 minutes. The majority are all represented by counsel - so I'm guessing they are all in similar 'presumption of hardship' situations.

I guess I should expect this to go quick ...

My research continues to show conflicting information about what the court looks for in deciding to approve or reject reaff. agreements.

I would rather not do a ride through - guess I will have to rely on my attorney to get us through this.

Sorry I'm so late to reply. I don't read the forums four times a day like I used to!

Our mortgage reaffirmation was kind of a sloppy in the way it was handled along with our bankruptcy case in general. In the end I'm content with the way it turned out and I think I was too up-tight while I was going through it to see things clearly.

Like you, I was negative on my Schedule J but I still intended to reaffirm our mortgage.

Some of the arguments in support of our decision to reaffirm was the fact that we owe less than HALF on our mortgage than the tax appraised value of our house. Keep in mind that I live in an area that saw no measurable real estate boom and therefore isn't seeing much of a meltdown either. We could argue about the "real" value of our home as compared to what we owed, but there's no reason to believe its value would be LESS THAN HALF of the tax appraisal -- NOW or in the forseeable future.

Our mortgage payment is principal and interest only and it isn't much more than the average person's car payment. We could NEVER rent a home for the same (or less) than our monthly payment and we might not even be able to rent a family-sized apartment, even if you include property tax and insurance.

My schedule J included some expenses that I had eliminated just before filing and it also included $250 a month for a car that I intended to reaffirm but didn't.

Not only was keeping my home (and mortgage) in my family's best interest, but I was clearly able to demonstrate it was well within our ability to afford by making some small adjustments to Schedule J based on changes to our family living expenses.

The whole Presumption of Undue Hardship thing might have been avoided if my attorney had explained why on the reaffirmation agreement. Unfortunately, it was filed with the presumption of abuse and there was no attempt to explain why it wasn't.

There was almost no preperation by my attorney prior to the hearing. We went to the hearing as prepared as I was able to be without the attorney's help.

At the hearing, I understood why the hearing was called. From the paperwork my attorney submitted, the judge couldn't tell if the loan was a mortgage or a home equity loan.

I went to the hearing and got a lecture from the judge about how he never recommends reafirming anything. My butt-kissing attorney even rolled his eyes and gestured toward the paperwork saying "I don't even know why I BOTHER filling out these agreements." The judge went on to explain how the world was clearly ending and nobody was safe. He made it sound like my house could end up being worth $5 and I would thank him for avoiding the obligation to repay thousands of dollars on a worthless house. He was convinced he had granted me the greatest gift in the world and proclaimed the mortgage a hardship and the hearing ended without me saying a single word.

Here I am today and I have to say that I see the judge's point. Yes, it bothers me a bit that my mortgage is in limbo. Yes, it worrys me that there may be some hidden consequence of getting off easy. Yes, I worry that selling the house some day might be a huge pain in the rear.

For now, I make my payments ON TIME and it's easy with the new-found financial discipline I'm exercising.

I think the only down side is being in limbo as it applies to my mortgage.

There's a slim chance the bank might try to run me out of here some day so they can sell the place and collect their money. There's also the slim chance that I may flee the ol' homestead too.

Being in limbo means that there might be attorney's involved if I flee or attorney's involved if the bank trys to run me out of town. Either way, there's a lot of "what ifs" that few people have answers to and that's the big down-side.

I'm happy it turned out like it did but I understand how having a "normal" mortgage like everyone else could be better somehow.

For now, the freedom of knowing I can pack up the family and head West without obligation seems more comforting than having a mortgage reaffirmed.

[goingcrzy]

Thanks JustBroke. You are a wonderful resource on this board. The majority of my questions have been answered by you in past posts!

[justbroke]

I have a question that has pondered me for some time. (sorry to stir the pot). If you show you have income after discharge by reduce or eliminating expenses, could the trustee come back and tell you that you now have extra cash to fund a 13?

Yes.

There are some Trustees who only tend to go after the over-the-median debtors or those discharging more than $100K in unsecured debt (that's mostly non-medical).

Chapter 7 Trustees have gone so far as to say that a car payment, ending in 18 months, should be considered as going away and that money being available for a Chapter 13.

However, this doesn't happen everyday. Most Chapter 7s are straightforward with no issues. It is the borderline cases or those which a general appearance of potential abuse (high income filers, high unsecured debt) that "interests" the UST. The UST doesn't have time to fight every case.

[deepin]

great question ... as I have considered ways to defend against the presumption of hardship on my 1st and 2nd mortgages - I thought about surrendering a vehicle I had previous planned on reaffirming.

at this point, I have decided against that - fearing that exact scenario (somehow being tossed back into a 13)

not sure if that concern is justified - have yet to discuss it with my attorney

[goingcrzy]

I have a question that has pondered me for some time. (sorry to stir the pot). If you show you have income after discharge by reduce or eliminating expenses, could the trustee come back and tell you that you now have extra cash to fund a 13?

[justbroke]

Interesting, in looking at the court calendar for the day of my reaffirmation hearing - I see approximately 7 reaff. hearings scheduled in the course of 30 minutes. The majority are all represented by counsel - so I'm guessing they are all in similar 'presumption of hardship' situations.

For some reason, Judges tend to schedule similar motions on the same day. Also, if they are represented by attorney, it's usually quicker because the attorney just needs to say that they agree that there is no presumption of undue hardship.

My research continues to show conflicting information about what the court looks for in deciding to approve or reject reaff. agreements.

They are all over the map. Some Districts won't even grant them because of underlying State non-bankruptcy laws make re-affirming "not in the best interest" of the debtor.

[deepin]

Interesting, in looking at the court calendar for the day of my reaffirmation hearing - I see approximately 7 reaff. hearings scheduled in the course of 30 minutes. The majority are all represented by counsel - so I'm guessing they are all in similar 'presumption of hardship' situations.

I guess I should expect this to go quick ...

My research continues to show conflicting information about what the court looks for in deciding to approve or reject reaff. agreements.

I would rather not do a ride through - guess I will have to rely on my attorney to get us through this.

[LuciluS]

With appropriate counsel provided, of course, you'd say things just as stated. Show that you're going to have some money (positive) left over. While I'm no attorney, I certainly wouldn't get into the numbers... only the things I would change.

"I'm going to get rid of my landline and DSL and change my subscription with the cable company. I'm looking to cancel my subscription to Bankruptcy Review and WestLaw as well."

Let the Court make the calculations. If they ask for numbers, then you answer, some come prepared in that respect. If you're $900 in the hole (negative) and trying to keep that $1,000/month mortgage... the Court is really going to wonder. If you're just a couple of hundred negative, then it could be a different story in reducing expense to at least get to a positive disposable income.

Very good Answer! I pray this doesn't happen to DH and I as we will have around ($450) DMI and house payment is $905.00. Filing 9/09. I've never wished for the future to hurry and get here, but I am now LOL!

[justbroke]

Scenario:

Judge ask Deepin to prove how it is not and the date of changes.

It would have to be after 341 right? and Deepin could say, I no longer have a landline or dsl internet and I changed my plan with my cable company which totals $______? justbroke you fill in the blank please?

With appropriate counsel provided, of course, you'd say things just as stated. Show that you're going to have some money (positive) left over. While I'm no attorney, I certainly wouldn't get into the numbers... only the things I would change.

"I'm going to get rid of my landline and DSL and change my subscription with the cable company. I'm looking to cancel my subscription to Bankruptcy Review and WestLaw as well."

Let the Court make the calculations. If they ask for numbers, then you answer, some come prepared in that respect. If you're $900 in the hole (negative) and trying to keep that $1,000/month mortgage... the Court is really going to wonder. If you're just a couple of hundred negative, then it could be a different story in reducing expense to at least get to a positive disposable income.

[LuciluS]

[QUOTE=justbroke;289003]Reaffirmations happen all the time. They are approved by attorneys and Judges day after day. However, like yours, some need a hearing to determine if they are not hardships. I can't tell you if having a negative disposable income (on Schedule J) is an indicator that it may be a hardship. However, just go in prepared to discuss how it is not.[/QUOTE]


Scenario:

Judge ask Deepin to prove how it is not and the date of changes.

It would have to be after 341 right? and Deepin could say, I no longer have a landline or dsl internet and I changed my plan with my cable company which totals $______? justbroke you fill in the blank please?

[justbroke]

If the Trustee still thinks it's a hardship can you just pay though w/o reffirming?

Yes, if the creditor allows you to "ride-through" the bankruptcy. Most (creditors) do allow it to ride-through, but the debt would be discharged.

[joh]

If the Trustee still thinks it's a hardship can you just pay though w/o reffirming?

[justbroke]

Was hoping someone on the board could offer at least one reaffirmation hearing success story.

Reaffirmations happen all the time. They are approved by attorneys and Judges day after day. However, like yours, some need a hearing to determine if they are not hardships. I can't tell you if having a negative disposable income (on Schedule J) is an indicator that it may be a hardship. However, just go in prepared to discuss how it is not.

[deepin]

Was hoping someone on the board could offer at least one reaffirmation hearing success story.

Makes me think I should prepare myself for a ride-thru.

[deepin]

Your lawyer should have already countersigned your re-affirmation agreement indicating it was not a hardship. I really don't understand how you now have to go to a hearing on a "presumption of hardship".

You shouldn't need to do much but show up.

Just Broke:

I can't say for sure that my lawyer countersigned. However, even if he did --doesn't the fact that we have a negative DMI force the court to hold the hearing to review the agreements?