Originally posted by despritfreya
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To all of the members and guests of this Forum:
I know a lot of you disagree with my belief that one should never reaffirm a mortgage. Many of you believe that it is in your best interest to reaffirm, thinking that such will help “improve” your credit score. I now want to point out why reaffirming a debt, when the law does not require it, is a big mistake. . . and this could happen to you.
This past week I was asked to write an opinion letter as to the ability of a debtor to get out from under a reaffirmation agreement. I spent the better part of today doing just that. This is such a touchy subject for me (as an attorney, a homeowner, and a consumer) that I felt compelled to post something about today’s efforts.
Several years ago this person filed a Chapter 7. The debtor reaffirmed both the 1st and 2nd mortgages. The 2nd was in excess of $70K (at that time). Both loans were current. A few years later the debtor lost the home to a foreclosure.
This debtor resided in an anti deficiency state so the 1st mortgage lender was precluded from collecting anything further. However, the 2nd was not.
Since the debtor signed a reaffirmation agreement the debtor is 100% responsible for now unsecured Promissory Note, which is currently in excess of $100K. The debtor tried to dispute the claim saying that he/she never intended to sign a reaffirmation agreement. (Too little too late.) The debtor is now being sued for the $100K that is owed, all because the debtor signed a reaffirmation agreement when one was not required. The debtor cannot file another 7 for several years and may end up in a 13. I am sure this person is really happy at the thought of filing another bk.
So, if you think this cannot happen to you, think again. I am sure this debtor never expected to lose the house and never expected to get sued for the 2nd. No one has a crystal ball. Bad things happen to good people and once again, this person is in financial ruin. Had this person NOT signed the agreement he/she would have been much better off. This is why I say:
“Why on earth would someone say to a creditor ‘despite my bk I will pay you and if I don’t you can sue the crap out of me’”?
This is exactly what each and every one of you is telling your creditor when you sign a reaffirmation agreement.
By the way, the reason I was asked to look at the issue was to see if I could find a way to invalidate the agreement as a defense to the state court law suit. I did not find an out for this person. Personally, I believe the debtor’s attorney committed malpractice by letting the debtor enter into the agreement, but that is probably not going to help this person in defending the suit.
If this persuades just one person not to sign on the dotted line then I have done my job.
Best regards,
Des.
I know a lot of you disagree with my belief that one should never reaffirm a mortgage. Many of you believe that it is in your best interest to reaffirm, thinking that such will help “improve” your credit score. I now want to point out why reaffirming a debt, when the law does not require it, is a big mistake. . . and this could happen to you.
This past week I was asked to write an opinion letter as to the ability of a debtor to get out from under a reaffirmation agreement. I spent the better part of today doing just that. This is such a touchy subject for me (as an attorney, a homeowner, and a consumer) that I felt compelled to post something about today’s efforts.
Several years ago this person filed a Chapter 7. The debtor reaffirmed both the 1st and 2nd mortgages. The 2nd was in excess of $70K (at that time). Both loans were current. A few years later the debtor lost the home to a foreclosure.
This debtor resided in an anti deficiency state so the 1st mortgage lender was precluded from collecting anything further. However, the 2nd was not.
Since the debtor signed a reaffirmation agreement the debtor is 100% responsible for now unsecured Promissory Note, which is currently in excess of $100K. The debtor tried to dispute the claim saying that he/she never intended to sign a reaffirmation agreement. (Too little too late.) The debtor is now being sued for the $100K that is owed, all because the debtor signed a reaffirmation agreement when one was not required. The debtor cannot file another 7 for several years and may end up in a 13. I am sure this person is really happy at the thought of filing another bk.
So, if you think this cannot happen to you, think again. I am sure this debtor never expected to lose the house and never expected to get sued for the 2nd. No one has a crystal ball. Bad things happen to good people and once again, this person is in financial ruin. Had this person NOT signed the agreement he/she would have been much better off. This is why I say:
“Why on earth would someone say to a creditor ‘despite my bk I will pay you and if I don’t you can sue the crap out of me’”?
This is exactly what each and every one of you is telling your creditor when you sign a reaffirmation agreement.
By the way, the reason I was asked to look at the issue was to see if I could find a way to invalidate the agreement as a defense to the state court law suit. I did not find an out for this person. Personally, I believe the debtor’s attorney committed malpractice by letting the debtor enter into the agreement, but that is probably not going to help this person in defending the suit.
If this persuades just one person not to sign on the dotted line then I have done my job.
Best regards,
Des.