Reaffirmation question

[mcordry]

I just filed Thursday and I checked reaffirmation, but ultimately I won't reaffirm. I want to stay in my home and continue to pay on it. But I am a bit nervous about the mortgage company (Cenlar) deciding they are going to foreclose on my home if I don't reaffirm. Has there been anyone on these forums that have decided to just "stay and pay" that has had the mortgage company foreclose on them even though they are timely with their payments. Whether you have first hand knowledge of this or know someone else it has happened to , please tell me the story. I am really scared that they will take my house, and my sister has gotten me even more nervous, asking about me not having anyplace to live if they do foreclose. I would love to have some positive stories to tell her.

[justbroke]

No entity can foreclose upon the property solely for filing bankruptcy or that the underlying obligation was discharged in a bankruptcy. You are in the 11th Circuit which does not "technically" allow a stay and pay, but it is done 99.99% of the time without any issue at all. Only the really small local banks (and small credit unions) tend to want the debtor to choose reaffirmation, redemption, or surrender. In fact, I have not heard a lot on this topic in a while from the local courts in the 11th Circuit (Florida, Georgia, Alabama).

In my Chapter 7, I listed "stay and pay" on my petition. Not a word from Bank of America. They don't bother you at all. You just need to maintain insurance and pay the mortgage. (I don't know if you have a Mortgage or a Deed of Trust there in Georgia.) If you have a Deed of Trust with the "Power of Sale" clause, then the foreclosures are much quicker. In any event, Mortgage or Deed of Trust, you would need to actually be a default of the terms, like you're not paying, for the lender to legally foreclose.

Many people do the "stay and pay" without any issue at all.

I can tell you that in the 11th Circuit, the only way for a mortgage company to foreclose is for there to be a default. Filing bankruptcy is not an automatic default. In the few cases where the mortgage company has chose to force the debtor to redeem, surrender or reaffirm, the mortgage company still had to wait for an actual default in order to be successful in a State-court foreclosure action. (The creditor sought a Motion to Compel in order to force the abandonment of the property.) In these few cases, the mortgage company petitioned the bankruptcy court to force the debtor to "surrender" by vacating the premises. Once vacated and payments not being made, the lender can proceed under State non-bankruptcy law.

References:
In Re Karl Linderman, Case No. 09-02087, Middle District Florida (2009) (PDF)
Taylor v. AGE Federal Credit Union, 3 F.3d 1512, 1517 (11th Cir. 1993) (landmark precedent case)

[mcordry]

THanks Justbroke..... that helps put my mind to at ease.... it is funny how we let others make us doubt our decision. I had made my decision then my sister (who has never dealt with bankruptcy) made me doubt myself.

[Drazil65]

As long as you pay on time every time you really should not have an issue.

Yes, sometimes we do let people get in our heads and that is a perfect reason why it is no one elses business when you file. If you tell others then you should expect to get their opinions, whether you asked or not. They will tell you because you let them into a very private moment, also you can probably expect that they will tell others, bankruptcy is just that juicy little bit of gossip that most people cannot hang onto. So be prepared.

Hopefully you will educate yourself by reading everything here and books regarding filing so that you will not fall for the opinions of the those that have not gone down this path. Knowledge is power, Good Luck!

[mbjr73]

I myself am a little worried about this, my 341 meeting is in two weeks. I just signed the re-affirm papers for my vehicle with ALLY bank. But I am not going to on the mortgage, because of my separation from my wife could lead to child support payments . I am just gonna pray that I can pay and stay. If they don't then I will look for a place to live.

[justbroke]

This may be a first, but since when did Ally require reaffirmation? They may "request" reaffirmation, but that doesn't mean you should. If they "require" reaffirmation or they'll go to the Judge, then that's a different story. I hope that the Judge denies your request to reaffirm the debt (if you are Pro Se).

(Yes, the 11th Circuit, Georgia included, requires you to redeem, reaffirm, or surrender personal property such as a car. However, many people still "retain and pay" on their statement of intentions and do not reaffirm. There are a couple of lenders that will fight the "retain and pay" with Ford Credit being one of those creditor. I do not know about Ally. If you are represented, then I hope your attorney reviewed yoru decision and concurs.)

[mbjr73]

justbroke, I signed the re-affirm papers yesterday and mailed them back to my atty, just for sake I called ALLY this morning and spoke with the bankruptcy department and I asked the lady if ALLY repos if the debtor stays current on the loan and doesn;t sign the reaffirm agreement, she said its on a case by case decision and they have repoed some vehicles. well I really cannot afford to lose my transportation to and from work, so I am going to stick with the reaffirm even though I would prefer a pay and ride.

Also I noticed on the paper work my atty sent for the re-affirm had the vehicle valued at 11,000.00 I still owe 6900.00 on it, when I did the KBB value it said around 7500.00.

[justbroke]

They use different prices depending on what your intentions are. For a redemption, they use wholesale value (close to clean trade-in). For a reaffirmation, they typically use clean retail (so an elevated price that a dealer would charge for a similar vehicle given its age and condition).

Maybe your attorney will check the box that it is a hardship. I don't know. If you do have equity then I'm not so much concerned. As I have often wrote, if you really need clarity always ask your attorney. If you must have your vehicle and the lender is known to repossess and not do a "retain and pay" ride-through, then signing the reaffirmation agreement may be your best option.