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    #1

    Reaffirmation questions

    I am a little confused on how reaffirmation works, and am hoping someone can clarify this for me.

    - Can a mortgage company/vehicle finance company force you to sign a reaffirm agreement, and if you refuse they take away your house and/or repo your vehicle? From what I have read the answer is no, but I could be wrong. The only way they can take away your house/car is if you fall behind on payments

    - Is the only real disadvantage to not reaffirming is that some creditors will not report you as being current, even though you continue to make the payments on time (thus not helping you rebuilding your credit post bankruptcy)?

    - If you don't reaffirm your mortgage, what kind of impact would that have you tried to refinance down the road (besides the impact of having a BK on your credit)?

    - I also understand that most creditors will take away online access to your account during the BK. Does this access typically get restored once you have been discharged?

    - If you chose not reaffirm, does that affect your disposable income when calculating whether or not you are eligible for Chap 7 vs 13?


    From what I understand not reaffirming usually makes sense since that gives you the ability to walk away from the obligation down the road in the event you cannot make payments (due to job loss, etc.) Is this correct?

    Thanks!
    Last edited by InSeriousDebt77; 03-19-2008, 09:52 AM.
    Tags: None
    #2
    1. If they are serious about having you sign a reaffirmation agreement and you refuse, then yes, they can conceivably foreclose/repo the home/car. The fact of the matter is, most lenders do not "force" the issue. The tricky issue is whether they can foreclose/rep "after" your BK is discharged and there is no reaffirmation agreement.

    For example, if the lender say, "we need you to sign a reaffirmation agreement", and you say "no", and then the lender files a Motion to Lift Stay in your BK, then they are serious about the reaffirmation agreement. But, if they squawk about a reaffirmation, but allow you to continue to make payments and do nothing in your BK to repo the secured property and your BK gets discharged, there is an open question as to whether the lender can simply repo anytime after discharge for the debtor not having reaffirmed.

    2. If you do not reaffirm, it really does not matter down the road for a refi. (I suppose if you try to refi with the SAME lender, it might matter). But you can prove positive payment history to the potential refi lender on your own, so it does not matter whether you reaffirm or not. There are other ways to rebuild credit.

    3. Online access depends, the experience of many people is that, no, online access is NOT restored.

    Comment

      #3
      Thanks HHM

      If I chose to say reaffirm my mortgage, but not my vehicles, does that affect disposable income calculations?

      My lawyer is recommending we do not reaffirm anything. Apparently state law dictates that we must be behind on payments before a vehicle can be repo'd. I didn't ask her about the mortgage though, and I am nervous that if we don't reaffirm our lender could come at us at any point in time.

      Comment

        #4
        Why do they take away online access?
        Filed C7: 3/21/08
        341 Meeting: 4/23/08
        Objections to discharge due: 6/23/08
        Discharged 6/30/08

        Comment

          #5
          Originally posted by InSeriousDebt77 View Post
          Thanks HHM

          If I chose to say reaffirm my mortgage, but not my vehicles, does that affect disposable income calculations?

          My lawyer is recommending we do not reaffirm anything. Apparently state law dictates that we must be behind on payments before a vehicle can be repo'd. I didn't ask her about the mortgage though, and I am nervous that if we don't reaffirm our lender could come at us at any point in time.
          Then I would listen to you lawyer. Failure to reaffirm does not effect disposable income calculation.

          If you decide to reaffirm, you need to approach reaffirmation as a negotiation, as an opportunity to get a better deal. For example, on a car, if I were upside down, I might approach the lender and say: I will reaffirm IF you reduce the balance owed on the note to the current market value, or I will reaffirm IF you reduce the interest rate to X%. Negotiating reaffirmations on mortgages like this is a little harder (because the actual decision maker on the mortgage note is usually 1-3 parties removed from the loan servicer.)

          Comment

            #6
            Originally posted by Teddy View Post
            Why do they take away online access?

            I think they do it out of spite.

            I really don't know, I think the argument is that the website is designed to get you to pay your debt, or sign-up for new programs etc, so in some round-about way, it would be a violation of the discharge.

            Comment

              #7
              Starting to make more sense to me now...

              We may be in the negative on our schedules, and according to our lawyer a judge would probably not approve a reaffirmation agreement due to us being negative. However, if we reaffirmed the house but did not reaffirm either vehicle (one is a lease up in a few years), would that be something a judge would approve?

              Comment

                #8
                Originally posted by InSeriousDebt77 View Post
                Starting to make more sense to me now...

                We may be in the negative on our schedules, and according to our lawyer a judge would probably not approve a reaffirmation agreement due to us being negative. However, if we reaffirmed the house but did not reaffirm either vehicle (one is a lease up in a few years), would that be something a judge would approve?
                I'm in that same boat. Started doing some paperwork and it looks like I may be slightly negative and would like to reaffirm the house but not the car. Interested in the responses too.
                Filed: 7/31/08
                341: 9/19/08
                Report of no distribution 10/23/08
                DISCHARGED: 11/19/08 (Day 60)

                Comment

                  #9
                  The other question I would have is what if I surrender the vehicles and reaffirm the mortgage? Does that then affect my schedule J?

                  Comment

                    #10
                    Originally posted by InSeriousDebt77 View Post
                    The other question I would have is what if I surrender the vehicles and reaffirm the mortgage? Does that then affect my schedule J?
                    The answer to that question depends on which district you are in, there was a recent ruling out of the 4th Judicial District (MD, VA, WV, NC, SC) that in fact, you CANNOT use the payment you were making on secured debt that you intend to surrender on your schedule J.

                    Comment

                      #11
                      Always good to read other peoples post. I learned something from this post that i did not know and will be able to use maybe when i do my BK.......
                      Filed August 15th 2008
                      Discharged:12/08/2008
                      Closed: 2/23/2009

                      Comment

                        #12
                        Originally posted by HHM View Post
                        The answer to that question depends on which district you are in, there was a recent ruling out of the 4th Judicial District (MD, VA, WV, NC, SC) that in fact, you CANNOT use the payment you were making on secured debt that you intend to surrender on your schedule J.

                        Would you be so kind as to cite this or give the debtor name for an opinion search on PACER. Thanks!

                        Comment

                          #13
                          Originally posted by diviaruba View Post
                          Would you be so kind as to cite this or give the debtor name for an opinion search on PACER. Thanks!
                          Someone already posted it somewhere on this forum, but I don't remember in what thread.

                          Comment

                            #14
                            Originally posted by HHM View Post
                            3. Online access depends, the experience of many people is that, no, online access is NOT restored.
                            out of curiosity, why do they take away on-line access? seems the would get their payment faster....

                            ann
                            ann

                            Comment

                              #15
                              Originally posted by ann1073 View Post
                              out of curiosity, why do they take away on-line access? seems the would get their payment faster....

                              ann
                              OBJECTION your honor, asked and answered.

                              Read further up in this thread

                              Comment

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