reffirm vs let it go

[macahs]

See, my attorney made it pretty clear that if it's discharged and not included - that's a foreclosure sep. from the bk but I guess the biggest thing is being stuck with the debt.

How would creditors know it's late if they don't report to the cra's (assuming you haven't reaffirmed)?

[SinkingFast]

LOL Macahs, you made perfect sense. This is where I get so confused. At what point is it IIB and what point is it not? Let's say we don't reaffirm but make payments. Then later lets say 1.5 years down the road end up foreclosing on it. Is it then NOT IIB? Would the foreclosure process have to happen at the same time as the BK in order to be considered 1 hit?

According the Mortgage Brokers that have posted here, if the BK and Foreclosure fall together, timewise, prospective Lenders in the future will view the 2 as one single event.

However, if you have a Foreclosure followed months or years later by BK, or visa versa, now you have 2 seperate events in your Credit History.

Say you file BK, discharge the debt for the mortgage, and "ride thru" by continuing to make payments. Then turn around and have a Foreclosure 1.5 years later. That would be 2 seperate Credit events.

If the BK and the Foreclosure occur simultaneously, now prospective Lenders in the Future will view the 2 as one single occurance.

Also, an FYI for you,.............. The Mortgage Brokers also said once you reach the 150+ days late stage on mortgage payments, prospective Lenders will also view that as a Foreclosure, whether you sell yourself or not.

[macahs]

To the best of my knowledge - it's only considered "incl. in bk" if you actually include it in the bk.

If you are discharged and you do not file the necessary paperwork to include the mortgage in the bk - then that debt is now yours. Any point after the discharge you are extremely vulnerable to being foreclosed on (by missing a payment, etc.)- in which not only would that debt stay with you for a long time (meaning, they'll attempt to collect) - that's when it's also a double whammy on your credit (one being the bk and the other the foreclosure).

The debt you would owe would be the difference of what it sold for at auction and what your pay off was (incl. all their attorney fees, etc.). This could be tens of thousands of dollars. Kind of like a a repo of a car - they take their collateral but you still owe the debt. Hehe, this is where I was stumped regarding a foreclosure - I was thinking the debt would disappear but that's NOT the case at all. It will only disappear if you include it in your bk - so definitely something to think long and hard about.

Hopefully my explanation and take on it didn't confuse matters even worse.

LOL Macahs, you made perfect sense. This is where I get so confused. At what point is it IIB and what point is it not? Let's say we don't reaffirm but make payments. Then later lets say 1.5 years down the road end up foreclosing on it. Is it then NOT IIB? Would the foreclosure process have to happen at the same time as the BK in order to be considered 1 hit?

[miss puff]

if you include it in the bk - you obviously walk away from the debt. Not the greatest option but definitely NOT as bad (from what I understand) to keep it, not reaffirm, bk discharge and lose it to foreclosure. Not only are you hit twice on your credit (one a bk and the second a sep. foreclosure) but you're stuck w/ that debt. Not that a foreclosure doesn't make that go away but you know what I mean. You walk away from the debt in a bk if you include it.

LOL Macahs, you made perfect sense. This is where I get so confused. At what point is it IIB and what point is it not? Let's say we don't reaffirm but make payments. Then later lets say 1.5 years down the road end up foreclosing on it. Is it then NOT IIB? Would the foreclosure process have to happen at the same time as the BK in order to be considered 1 hit?

[macahs]

Definitely food for thought when considering your options!

Interesting stance, Macahs. A "De Facto" Reaffirmation. I can see how a Court would view maintaining payments as a form of "Reaffirmation" where no official agreement was signed.

If your attny is mentioning it to you, my guess is there's basis for it in NH. Evidently some Lender has effectively argued this in the past and won an Opinion in their favor.

[SinkingFast]

Interesting stance, Macahs. A "De Facto" Reaffirmation. I can see how a Court would view maintaining payments as a form of "Reaffirmation" where no official agreement was signed.

If your attny is mentioning it to you, my guess is there's basis for it in NH. Evidently some Lender has effectively argued this in the past and won an Opinion in their favor.

[macahs]

I have to chime in.

I live in NH and my bk attorney told me that even if we do not sign the official paperwork to reaffirm - by making payments, a judge may very well look at it as though we reaffirmed even though papers were not signed, (aka 'intent to reaffirm'). You may just want to confirm this w/ an attorney as it sounds like (at least here in NH) that a lender could very well take that stance.

The other thing to caution (and I skimmed through this thread so not sure if this has already been mentioned)- if you include it in the bk - you obviously walk away from the debt. Not the greatest option but definitely NOT as bad (from what I understand) to keep it, not reaffirm, bk discharge and lose it to foreclosure. Not only are you hit twice on your credit (one a bk and the second a sep. foreclosure) but you're stuck w/ that debt. Not that a foreclosure doesn't make that go away but you know what I mean. You walk away from the debt in a bk if you include it.

The other option is to try getting a short sale if you want to incl. it in the bk but you don't think you can get what it's worth. A short sale, from my understanding, is a lot more acceptable than incl. something in a bk and definitely better than a foreclosure after the fact.

I'm on 3 hours of sleep - I hope I made sense w/ my post.

[miss puff]

Miss Puff,

I absolutely will not reaffirm our mortgage! Real estate prices are dropping and when our mortgage does reajust i may not be able to make the payments, not to mention that property taxes are also rising! Thereforem I do not want to be responsible for a deficiency balane. I included the mortage in the bk, but i still continue to make payments. I may or may not be able to sell, but I just do not want to take any chances on it. Hope this helps!!!!!!

Debtisbad, this is what we have decided to do too. While we are hoping to have more money (just because we won't be paying to all our cc's and truck) next year, I just don't want to reaffirm just to realize that they are too far out of reach. And then we try to sell and can't' sell or can't get what we need to get out of it. It kinda sucks that we won't get reporting from the credit agencys but geez, we gotta do what we gotta do to survive after this.

I told my husband that when this is through I would really like to SAVE money. We never have. But even if we can't neccesarily save money, I would at least like a little money still in our checking account when the next payday rolls around instead of writing a check on wed, hoping it doesn't go through till friday when my hubby gets paid.

[debtisbad]

Miss Puff,

I absolutely will not reaffirm our mortgage! Real estate prices are dropping and when our mortgage does reajust i may not be able to make the payments, not to mention that property taxes are also rising! Thereforem I do not want to be responsible for a deficiency balane. I included the mortage in the bk, but i still continue to make payments. I may or may not be able to sell, but I just do not want to take any chances on it. Hope this helps!!!!!!

[SinkingFast]

In a Refinance, you don't "Buy Back" anything. You simply borrow the money from one Lender to pay off the other Lender. Maybe even use the same Lender, just get better terms.

You'll go thru the same process as before. Loan application, income verification, credit check, appraisal and inspections, etc. Then the Refi Lender pays off the existing note(s).

Sometimes, tho, what happens in BK, is the Lender quits reporting your mortgage payments to the CRA's. You may need to find a way to keep track of your payment history or get the Lender to send you transaction statements so you'll have verification down the road.

You may not even need to wait a couple of years. You'd have to wait that long to get a gov't backed loan or a loan from a Prime Lender. But, you can finance a mortgage quicker than 2 years with many Sub Prime Lenders.

One thing that will be a big deciding factor on how long you wait to refi,........ You're gonna have to see if you'll be able to absorb the additional $$$/mo into your budget when your mortgages adjustment next spring.

[miss puff]

Thank you all so much for your replies. I always look to the advice of the board when i need to think about something and make a decision and not look at it emotionally (I have an emotional connection to our home).

Me and hubby were talking and decided the best thing to do is to not reaffirm and try to do a ride through, see if we can handle the payments when they go up in April for awhile. If not, we walk. I was wondering though, if we don't reaffirm but stay current for a couple of years repair our credit and get a decent rate, can we refinance to a lower rate if we didn't reafirm? How does that work? Would we actually be buying the house back from ourselves? Does the bank even allow that?

[BassBoy]

The utilization of the grace period can be risky IMO. If you wait until the 15th of the month, you must realize that the next payment is technically due in 15 days. There could be the possibilty of the next month's payment waiting until the 15th again. And over and over again for the next several months. We were having this happen all of time while we struggled with finances and it caught up with us. It's like a snowball rolling down a hill.......gets bigger and bigger.

[SinkingFast]

I agree with the others.

Even tho legally speaking, the terms of the original contract are supposed to stand post BK, what a Lender will tolerate or allow totally depends on the Lender. Lrprn's personal experience speaks volumes on the "Grace Period" issue.

I'd say Bezoar's attny gave good advice. Pay on or before the 1st of each month. And using USPS mail with, at the very least, delivery confirmation, would be a good way to go as well. I'm paranoid enough to do as Bezoar does and go with the new Certified Mail stickie. It's bright pinky red and you can access the signature delivery online.

[lrprn]

Thank you SF. That was exactly what I needed to know.

Can anyone define "payments on time"? What I mean is on a house payment it is due on the first but you have that 15 day grace period which is where we are always paying it. Do you still get that 15 days if you are not reafirming or does it HAVE to be paid on the first. Thanks

This varies depending on your lender, but because of the automatic stay and lenders' inability to request payment by sending invoices to pay during that time, you may not know there's been a problem with your account until you receive your discharge and your bills start up again.

There have definitely been situations where a mortgage lender that had a 15 day grace period before bankruptcy will suddently count any payment made after the official due date as late. The reason I know this for a fact is that this happened to us!

Our mortgage company said we were in arrears a month when we filed Ch 13 and that was the basis of their objection to our Ch 13 plan. We had paid our mortgage the month we filed well within the 15-day grace period, but it went into the lender's account after the official due date. They tried to use this situation to prove we were a month overdue when we weren't. Because we had proof (the mortgage company's own bk "this is not a request for payment" form showing no money owed and no late fee the month after we filed), our lawyer got them to withdraw their objection.

Best to proceed cautiously with this and make no assumptions that a grace period that was fine before bankruptcy automatically is still going to be honored afterwards. If you can make the payment so it's in the creditors account on the actual due date each month, by all means do so!

[bezoar]

My atty told us to be absolutely sure the payment was there by the due date - in our case, the first of the month.

It's been tough - that 15 day grace period used to be nice, but we're not willing to "test" the lender. They might not do a thing as long as it's there by the 15th, but the fact is that they could if it is even 1 day late.

(I'm also paranoid enough to send the payment certified/return receipt - just to have proof that they received it on time.)