We are doing a Loan Mod Agreement with our mortgage company. We were discharged 6 years ago. I have done the trial payments and received the actual agreement a few days ago. I called them to ask if their is any language that needs to be inserted into the agreement ("The Lender agrees that, due to the discharge you received in a Chapter 7 bankruptcy proceeding subsequent to the execution of your loan documents, you will not have personal liability on the debt pursuant to this Agreement." and they said No. I was reading through the Agreement and I saw this "That the Loan Documents as modified by this Agreement are duly valid, binding agreements, enforceable in accordance with their terms and are hereby reaffirmed." Any idea what this means? I would reach out to our BK attorney, but he takes forever to get back to me. Thanks for your help in advance.
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If the debt was discharged in bankruptcy, the reference to a reaffirmation is meaningless. A debt can only be reaffirmed if the debtor and creditor sign a reaffirmation agreement that is filed with the bankruptcy court and approved, either by a declaration by the debtor's attorney that it isn't a hardship or a court order. Even if you wanted to reaffirm the debt, you couldn't do it in a legally binding manner without reopening your bankruptcy case.
As long as you are modifying the loan and not refinancing it, the discharge will be unaffected. There is no guaranty that the lender will believe that if you default. But, if they sued you for a deficiency or took any other collection action after you inform them in writing that the debt is discharged, they would be in violation of the permanent injunction against attempting to collect a discharged debt.LadyInTheRed is in the black!
Filed Chap 13 April 2010. Discharged May 2015.
$143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!
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