Has anyone kept your home in a CH7?

[justbroke]

How nichole handled her bankruptcy is exactly the strategy that I'm in now. I select reaffirm, but the bank never sent the paperwork! When I asked them about it during my negotiation on the modification, they said that they wouldn't send reaffirmation paperwork unless I really wanted it and that the modification terms do not require a reaffirmation.

Always "stay and pay" if you can.

[Freddy03]

How nichole handled her bankruptcy is exactly the strategy that I'm in now. I select reaffirm, but the bank never sent the paperwork! When I asked them about it during my negotiation on the modification, they said that they wouldn't send reaffirmation paperwork unless I really wanted it and that the modification terms do not require a reaffirmation.

Always "stay and pay" if you can.

What happens if you check off the reaffirm the box and they send the paperwork? I don't want to reaffirm but I would like to work out a non recourse loan mod after the BK is over.

[justbroke]

What happens if you check off the reaffirm the box and they send the paperwork? I don't want to reaffirm but I would like to work out a non recourse loan mod after the BK is over.

Generally speaking, nothing will happen. I found that a modification during a Chapter 7 is much easier than before filing or during a Chapter 13. Just my experience!

[Phx]

I was current on all of my mortgages when I filed chapter 7. My attorney said that I needed to be current on all. We checked reaffirm but none of my mortgage servicers sent the papers to sign so we did not reaffirm anything. I stopped paying my 2nd mortgages after I filed and then settled with them to release the liens. We were discharged in July and are still living in the house.

So do I need to be current on my 2nd mortgage as well, just to convert to a Ch7 ? My 2nd is very behind since I'm currently in a 13, and have not paid it in years.


Nichole - Can I ask what percentage you settled for? I was planning on this strategy myself.

I have already done a loan mod on my 1st.

[nichole04]

I settled for 5% of the balance. My lawyer told me to be current before filing chapter 7 but if your 1st mortgage is more than the house is worth then it should leave your 2nd unsecured and it may not be necessary to be current on the 2nd. However, I would speak with an attorney to be sure.

[Snax]

We indicated our intent to reaffirm our first mortgage and have kept current on payments to stay in the house. Citibank continues to accept our money and we think will likely do so unless our equity suddenly flips from 20% under to significantly over. Even so, I suspect that there is a legal question to consider with the precedent of the mortgage for which a lien is placed, where if a property owner continues to make payments as originally agreed, could the bank in fact be in for losing a foreclosure fight if the owner resists the action? (We are personally very far from considering such a fight and would simply find other digs, but it's one of those things I keep wondering about.)

Edit: Think I just found the answer to that question here - http://www.bkforum.com/showthread.ph...0-Reafirmation

[Phx]

I settled for 5% of the balance. My lawyer told me to be current before filing chapter 7 but if your 1st mortgage is more than the house is worth then it should leave your 2nd unsecured and it may not be necessary to be current on the 2nd. However, I would speak with an attorney to be sure.

Thanks Nichole!

[justbroke]

Even so, I suspect that there is a legal question to consider with the precedent of the mortgage for which a lien is placed, where if a property owner continues to make payments as originally agreed, could the bank in fact be in for losing a foreclosure fight if the owner resists the action?

No they can't under all State foreclosure laws that I know of. However, they can go back to the Bankruptcy Court and seek a Motion to Compel Abandonment of the property. Once that motion is granted -- highly likely if you didn't actually reaffirm or redeem -- you'll be forced out, and then the clauses within your Deed of Trust or Mortgage will kick in. Specifically, if you "abandon" the place for 7 days or more, then the Lienholder can take steps to proceed with foreclosure.

Yes, it's a backdoor foreclosure, but some small ankle biters (credit unions, "community" banks) have been successful with this strategy in Florida.

Adding that for Arizona, you are an anti-deficiency State, so I don't think the Florida problem could bite you.

[Snax]

Interesting. I would think that in order for them to back door it this way, the banks would have to actually offer the reaffirmation option and have it refused. (Which I gather doesn't always happen.) Any idea if that is actually so?

[justbroke]

Interesting. I would think that in order for them to back door it this way, the banks would have to actually offer the reaffirmation option and have it refused. (Which I gather doesn't always happen.) Any idea if that is actually so?

No. The problem is that most people don't sign the reaffirmation or mark "stay and pay" on the statement of intentions. It is only in those instances that the ankle biters have gone after the debtors.

There could be an argument, in the Bankruptcy court, that if the reaffirmation was never offered and the debtor actually marked reaffirm on the Statement of Intentions, that the lender may not be able to compel. However, a reaffirmation agreement is just that... an agreement. It has to be confirmed by both parties and the lender is under no obligation to offer and the debtor is under no obligation to accept.

The only time I have seen these cases, in Florida, was when the debtor tried a ride-through (stay and pay) and the lender -- an ankle biting community bank or credit union -- went back to the court to FORCE a reaffirmation or surrender.

[StartinOver]

Generally speaking, nothing will happen. I found that a modification during a Chapter 7 is much easier than before filing or during a Chapter 13. Just my experience!

Hmm... really? I have a mod package (3rd time's a charm?) in internal review by the servicer right now, but the house is in foreclosure, we have a foreclosure sheriff sale date for March 7, and I think that the servicer can't get out of their own way on the review before they do the sale. (State is NH it's not a judicial foreclosure state.) I have a thread in the foreclosure section of the forum. I'm trying to figure out what to do next. I'll be in touch with the attorney we have retained, but your post makes me wonder if the advice he gave us to do the modification before the BK was wise. He said that BK filing stops the modification process in it's tracks. If that happens, no way we can afford the current financing on the house so it would end up being a Chap 7 and surrender.

Or did you mean start the BK and then go to the lender requesting a mod after they see that they will otherwise end up with the underwater house being surrendered? I'm confused.

[justbroke]

Or did you mean start the BK and then go to the lender requesting a mod after they see that they will otherwise end up with the underwater house being surrendered? I'm confused.

Yes, but in any case, be ready to actually surrender or lose the home. That was my strategy. I told them that they had until May 24th before the case discharged. That seemed to motivate them. I think mine was completely done in 6 weeks, with only 4 weeks to turnaround the entire package. My package wasn't lost. I faxed it to them once. I made sure it had everything requested. I even made my own expense spreadsheet (really from my Chapter 13) and had many notes.

I was impressed by their speed and no need to do "trial" payments. (Considering that I was in a Chapter 13 for 20 months and they were already receiving monthly payments on time from the Trustee.)