question regarding home included in ch 7

[miss puff]

Hi All. I was thinking. I have read here a few times about whether or not your home is included in your chapter 7 as to if you would owe any defficient balance. What exactly does "included in BK" mean? We listed it as a creditor, but we said we were going to reaffirm but we didn't. Is it still included? Or because our original intent was to reaffirm make it not included in bk? Thanks

[CindyLou]

All of your debts are required to be included in your BK. You can then choose to reaffirm If you reaffirm then in essense you "undo" that debt from the BK. You will then be completely responsible for that debt regardless of the BK.

[CindyLou]

Afterthought: If you owe deficient balances you cannot reaffirm. You need to be up to date to do that.

[HHM]

The term "included in BK" is used rather loosely in this forum. I think what most people mean on this forum by "included in BK" is that it is a debt that will be "discharged" in the BK.

Strictly speaking and from a legal standpoint, all your debt that existed on or before the date you filed BK is "included" in your BK, meaning, it is part of your bankruptcy estate. The bankruptcy estate is made-up of all your assets and liabilities that exist on or before the date you file bankruptcy. To clarify our terms, a deficiency balance is when you owe more to the bank than the house is worth, an arrears is when you have missed mortgage payments and owe the bank a certain amount of money to bring your monthly payments current.

As to your question. In nearly all states, mortgage companies are not entitled to a deficiency balance in the first place, so you may be worried about nothing. I would need a little more info to answer your question specifically, i..e when did you file, are you discharged already, etc. As cindy has pointed out, if you are in arrears, and its is significant, (more than two months), the bank will typically opt to foreclose. You, can legally, do a reaffirmation even when you are in arrears, but the reaffirmation agreement will require you make an overpayment on your monthly mortgage to make up the back payments, and banks typically only allow up to six months to do so.

If you file chapter 7 BK and you want to stay in your house AND you are current on your mortgage payments, you either reaffirm and continue to make the payments, and in some cases, (and I stress in some cases) can simply continue to make the payments as scheduled. IMO, the BK code requires reaffirmations for secured debt if you want to keep the underlying property, but some creditors simply allow you to continue to make the payments (ride through). If you don't want to the house, stop making payments, or do not do a reaffirmation agreement, then the creditor can foreclose on the house and you will lose the house. Any deficiency balance, if allowed, would be discharged in your BK.

[miss puff]

If you don't want to the house, stop making payments, or do not do a reaffirmation agreement, then the creditor can foreclose on the house and you will lose the house. Any deficiency balance, if allowed, would be discharged in your BK.

Thanks, that pretty much answers what I was asking. We filed in August, 341 in September and discharged, no asset (not closed yet) on November 22, 2006.

I was just wondering because we originally were going to reaffirm and said so in our schedules but then we decided it would still be a struggle to hold on and stopped making payments in October. I just wanted to make sure that it would still be included in our bk if we orginally said on the schedules we were going to reaffirm, even though we never did.

Thanks again

[CindyLou]

Thanks for the clarification HHM. I was talking about being behind in payments not a deficiency balance...