Wondering if I should reaffirm after Ch7?

[Scottowl]

I was in a Ch 13 plan until my income dropped below being able to afford a plan. I converted to Ch 7 and have the 341 meeting coming up later this month. I am wondering if I should reaffirm the mortgage.

I am still in arears approximately 4,000$. I would like to stay, as the payment of 750$ includes taxes and insurance.
It would be nice to have the flexibility to leave if things go bad in the future. I could not find a rental for what I am paying now, even a room in somebodys house.

My question regards the arears. Would a mortgage company work towards my getting even if I do not reaffirm?

[justbroke]

My question regards the arears. Would a mortgage company work towards my getting even if I do not reaffirm?

I hate to say this, but it really depends on your mortgage company. Back in 2010, my mortgage company was HIGHLY motivated to do a modification before my case was discharged! It was quick, painless, and they just put the arrears (I think it was $11,000) at the end of the mortgage. I was not expecting that, but I asked them to do it right after I filed (converted). I did not need to reaffirm.

So, the key is likely going to be whether you can get a modification.

Never reaffirm a mortgage... ever.

Never reaffirm a mortgage when you are in arrears.

There may be one case in which a reaffirmation is possibly a good thing. If you could get them to change the terms of the mortgage by reducing the interest, re-amortizing the payments, and/or putting the arrears at the end of the mortgage term, then it may make sense to reaffirm. Even then, I avoided reaffirmation and still had my mortgage re-amortized and received a reduction in interest. (It's a low chance that your mortgage company is so motivated, but it is good to ask.)

[Scottowl]

This is a FHA, originally through Chase, now being handled by Carrington. I do not expect to get a loan modification with my lousy credit and paltry retirement income but was hoping for an agreement to make up the difference over a year or so.

Would you think auto lenders would negotiate a cash settlement? I have one auto loan with a balance of around 700$.
I thought I would be OK reaffirming that, but I'm wondering if they would accept a one time payment for less.
This is a local finance company known around the Pacific Northwest well known for usury level interest rates.

Thanks for the benefit of your experience, JB!

[justbroke]

If the value of the vehicle is less than $700, then the proper way to do this, in a Chapter 7, is a redemption. It's probably too late for a (722) redemption.

Those local finance companies are sharks and you could try to negotiate with them. However, I suspect that they probably demand a reaffirmation (if they are as "sharky" as I believe they are) or they'll want a surrender. But, again, you could possibly negotiate by telling them that they'll "eat steel" if you decide to just let them take the car.

You can also typically negotiate a reaffirmation which includes a reduction in the interest rate. Whether those sharks at the local finance company even know where to being, is the big question. Usually, I'd want to know my strategy the day before I filed and start my negotiations (redemption, negotiated reaffirmation, etc).

[flashoflight]

Scottowl Remind me why the FHA COVID forbearance and partial claim/COVID loan mod weren't pursued. I don't remember if the arrears started before or after March 2020. That would have been the easiest way to resolve your mortgage arrears.

Generally, it's a lot easier to deal with the mortgage lender from the inside of a chapter 13 automatic stay bubble even if that means filing a new 13 after discharging the 7. My mortgage lender finally sent me a mitigation letter to my lawyer to work with me after I got into the 13. That wouldn't have happened if I didn't file BK or filed a 7.

[Scottowl]

I did ask my atty. about the COVID help, and he said I did not lose enough income to COVID to make a difference.
I filed the original CH 13 in 2017.

Yikes! Another 13. The lawyers bill would be more than the amount I am behind. Also, my income is now at 2100/mo. Wouldn't I have a hard time getting any repayment plan approved?