Mortgage company did not reaffirm

[TEW]

Reaffirming your mortgage reverses your BK on that loan. If something happens in the next 8 years you have no protection you can NOT file again. If you lose your job or get sick or someone in your family gets sick and you can not make the payments foreclosure will get very expensive for you. I have a short sale on my house I got to see what the attorney’s for the foreclosure have been charging over 14K and they haven’t really even started. So if you reaffirm and then have a problem you are in big trouble. Think the calls from the CC Company were bad? Owe the mortgage company 50 K or 100K and they know they have you.

NOT Reaffirming does not change a thing after your BK the loan is discharged you keep paying you keep the house. If you sell the house you get the equity and buy something else if you have a catastrophe you walk away.
This is a very dangerous way to fix your credit score…

[Kansas1960]

I see your point. Do I have to reaffirm to stay in the house? Can they make me reaffirm? Do I have choice not to reaffirm?

[TEW]

Hmmm..interesting topic. I've always been under the belief that to keep your home after discharge you need to reaffirm. Am I wrong in this assumption? I really want to keep my home and car, after all it is MY HOME. Is it really possible to keep your home without reaffirming it yet not be responsible financially in case of unforeseen circumstances?

Your car has to be in WA here is a link for you
http://research.lawyers.com/Washingt...ton-State.html

[TEW]

I see your point. Do I have to reaffirm to stay in the house? Can they make me reaffirm? Do I have choice not to reaffirm?

No that is up to you. the trustee and the judge has the final say.

[Kansas1960]

I am still confused. You say it is up to me but then you say the judge and trustee have the final say. I guess I need to know if I am required to reaffirm to stay in the house.

[TEW]

I am still confused. You say it is up to me but then you say the judge and trustee have the final say. I guess I need to know if I am required to reaffirm to stay in the house.

No you do not have to Reaffirm to stay in the house. If you did the judge and the trustee have to approve it

[yeahdischarged]

Check with the laws in your state. For us, until we missed a payment, we were not in default of our original mortgage loan document, even though we filed bankruptcy. We almost begged our lender to reaffirm our home and they simply would not. I do not know what they were smoking, lol, but it worked for us. I was like you all - freaked, scared, and wanting to reaffirm everything. Our lawyer had a time convincing me to calm down and let the bankruptcy give us a fresh start.

Then the housing market started crashing, and unless your market is booming, why would your lender want to come get your home, pay to maintain it - utilities, winterproofing the water pipes, dealing with listing fees, lawn maintenance, pay to sell it, yada yada? With all the other foreclosures on their books? That would be a hard sell to their investors. If they have a loan performing, I don't care how much equity there "might" be, that is "might" - that equity doesn't exist until someone pays it, and after months on the market in this day and age, vacant, is your home really gonna pull that price? It might, but that's a huge gamble your lender would have to sell their investors who are trusting them to do the best and right thing with their money. Especially nowadays.

With our vehicle, we signed reaffirmation papers (against lawyers advice) and that lender failed to file them in time. Again, I was a hysterical mess (lol - just being honest), but also in the end, that vehicle started falling apart and needed thousands of dollars in repairs AND we were upside down. We called to give it back and after repeated phone calls, they finally arranged to pick it up over 4 months later. They didn't want it! Then they sold it for $4000 at auction (loan value was over $16000) and they were done. Not able to come after us for the different, thank goodness!!! Had that reaffirmation been filed, we would now owe that $12,000!!!!!

Once we were discharged and started calming down, we realized we could save a few thousand dollars in a few months and buy a nice used Toyota, which we did. Then later we purchased another vehicle with a small loan (although we had cash to buy it fully) simply to start rebuilding credit. That loan was 5.75% and I was so surprised! I had read stories that it would be double digits. Not so for us.

So, check the laws in your state. Can your lender legally show up on your door and kick you out if you have not missed a single payment? That is the question. And even if they could, why would they? What kind of dingbat lender would that be?

Had our home not been upside down, we could have sold it, kept any equity we had, etc. The lender wouldn't have known squat. As long as we were making payments, nothing was flagged on the account. We would have sold it, pocketed equity(had their been any) and paid the loan off. Simple and normal. And something I haven't added ever, I think, (to avoid confusion) is that even though we weren't reaffirmed, our lender DID report our on-time payments for the year and half we made them post discharge to Transunion (the only one). When we stopped paying, the lender went back in and "erased" that data (which honestly had been entered illegally, but we hadn't complained lol). They were legally forbidden to report our non-payment, so they took the time to erase all their payment entries, which were technically forbidden once the loan was discharged. Our scores dropped 12 points. It was nominal.

Think "fresh start". Anyone who feels scared into reaffirming ANYTHING they are upside down on needs to really stop and think this through. Bankruptcy wipes your slate clean (and you will have the emotional battle scars to prove it! lol). So WHY would you reverse your bankruptcy protection and re-encumber yourself if your state does not require it? Whether the state "requires" it or not is coming down to individual case law from what I understand. I am not a lawyer and do not play one on TV nor did I get my JD from the Internet (lol), so do check with your state laws.

I'm just saying this: When the new laws changed, EVERYONE swore up and down that you HAD to reaffirm, period, end of it. There were practically fights online over it. And this was right when we were going through it - too early for any case law to have really made news. We just had to trust our lawyer, who was very very good, and definitely earned his money since our case was very very difficult, over the means test, chapter 7. We were honest, though, survived an audit by the UST, provided 100 pages of documentation and made it through. Dehydrated from crying, but we made it! lol

If you have a lender so stupid as to show up and take your upside vehicle or home from you, laugh your butt off while they do it. Really - think about how utterly stupid that would be if they did that and then they deserve whatever comes to them in the way of fees, upkeep, etc. Meanwhile, your loans were cleared, you owe nothing. If they take a $100,000 loss on your home, they can't come after you for a dime UNLESS you reaffirm!!! Understand? Reaffirm anything and it as if you did not file bankruptcy.

Good luck to all - I KNOW how stressed and confused you must feel. I simply share our experience in case it can help. (And yes, we did NOT get a separate Public Record for the foreclosure, although many kept claiming it would be so. I didn't know how, since it was a discharged loan, and in our case, even 1.5 years after discharge, there was a foreclosure but NO additional public record. Only one public record that mentions our chapter 7 discharge, that's all.)

[TEW]

Check with the laws in your state. For us, until we missed a payment, we were not in default of our original mortgage loan document, even though we filed bankruptcy. We almost begged our lender to reaffirm our home and they simply would not. I do not know what they were smoking, lol, but it worked for us. I was like you all - freaked, scared, and wanting to reaffirm everything. Our lawyer had a time convincing me to calm down and let the bankruptcy give us a fresh start.

Then the housing market started crashing, and unless your market is booming, why would your lender want to come get your home, pay to maintain it - utilities, winterproofing the water pipes, dealing with listing fees, lawn maintenance, pay to sell it, yada yada? With all the other foreclosures on their books? That would be a hard sell to their investors. If they have a loan performing, I don't care how much equity there "might" be, that is "might" - that equity doesn't exist until someone pays it, and after months on the market in this day and age, vacant, is your home really gonna pull that price? It might, but that's a huge gamble your lender would have to sell their investors who are trusting them to do the best and right thing with their money. Especially nowadays.

With our vehicle, we signed reaffirmation papers (against lawyers advice) and that lender failed to file them in time. Again, I was a hysterical mess (lol - just being honest), but also in the end, that vehicle started falling apart and needed thousands of dollars in repairs AND we were upside down. We called to give it back and after repeated phone calls, they finally arranged to pick it up over 4 months later. They didn't want it! Then they sold it for $4000 at auction (loan value was over $16000) and they were done. Not able to come after us for the different, thank goodness!!! Had that reaffirmation been filed, we would now owe that $12,000!!!!!

Once we were discharged and started calming down, we realized we could save a few thousand dollars in a few months and buy a nice used Toyota, which we did. Then later we purchased another vehicle with a small loan (although we had cash to buy it fully) simply to start rebuilding credit. That loan was 5.75% and I was so surprised! I had read stories that it would be double digits. Not so for us.

So, check the laws in your state. Can your lender legally show up on your door and kick you out if you have not missed a single payment? That is the question. And even if they could, why would they? What kind of dingbat lender would that be?

Had our home not been upside down, we could have sold it, kept any equity we had, etc. The lender wouldn't have known squat. As long as we were making payments, nothing was flagged on the account. We would have sold it, pocketed equity(had their been any) and paid the loan off. Simple and normal. And something I haven't added ever, I think, (to avoid confusion) is that even though we weren't reaffirmed, our lender DID report our on-time payments for the year and half we made them post discharge to Transunion (the only one). When we stopped paying, the lender went back in and "erased" that data (which honestly had been entered illegally, but we hadn't complained lol). They were legally forbidden to report our non-payment, so they took the time to erase all their payment entries, which were technically forbidden once the loan was discharged. Our scores dropped 12 points. It was nominal.

Think "fresh start". Anyone who feels scared into reaffirming ANYTHING they are upside down on needs to really stop and think this through. Bankruptcy wipes your slate clean (and you will have the emotional battle scars to prove it! lol). So WHY would you reverse your bankruptcy protection and re-encumber yourself if your state does not require it? Whether the state "requires" it or not is coming down to individual case law from what I understand. I am not a lawyer and do not play one on TV nor did I get my JD from the Internet (lol), so do check with your state laws.

I'm just saying this: When the new laws changed, EVERYONE swore up and down that you HAD to reaffirm, period, end of it. There were practically fights online over it. And this was right when we were going through it - too early for any case law to have really made news. We just had to trust our lawyer, who was very very good, and definitely earned his money since our case was very very difficult, over the means test, chapter 7. We were honest, though, survived an audit by the UST, provided 100 pages of documentation and made it through. Dehydrated from crying, but we made it! lol

If you have a lender so stupid as to show up and take your upside vehicle or home from you, laugh your butt off while they do it. Really - think about how utterly stupid that would be if they did that and then they deserve whatever comes to them in the way of fees, upkeep, etc. Meanwhile, your loans were cleared, you owe nothing. If they take a $100,000 loss on your home, they can't come after you for a dime UNLESS you reaffirm!!! Understand? Reaffirm anything and it as if you did not file bankruptcy.

Good luck to all - I KNOW how stressed and confused you must feel. I simply share our experience in case it can help. (And yes, we did NOT get a separate Public Record for the foreclosure, although many kept claiming it would be so. I didn't know how, since it was a discharged loan, and in our case, even 1.5 years after discharge, there was a foreclosure but NO additional public record. Only one public record that mentions our chapter 7 discharge, that's all.)

well said thank you

[Mi Bankruptcy]

My attorney told us in Michigan we had to reaffirm. I looked and couldn't see where it states we have to reaffirm. Can anyone tell me my attorney is wrong. I am in the Western District.

[yeahdischarged]

MiBankruptcy, I'm sorry I can't answer regarding Michigan. But I will tell you that our auto lender, CapOne, acted ferocious, demanded we reaffirm, sent the paperwork. Although our lawyer advised us not to reaffirm, CapOne was acting like a you know what and giving us no choice. In the meantime, this was our only vehicle and we didn't know what we would drive if we didn't keep it. (Credit union had threatened to come get one of our 2 cars since it had some equity, so lawyer advised us to get a used vehicle, trade in that equity vehicle, and overall lower our monthly car payments, showing the court we were actively trying to decrease our expenses. We went from 2 cars to 1 car and lowered our total payment by $300 a month. I was having a major health crisis and couldn't drive anyway at the time, so we thought we'd struggle through and get another car a few months down the road, which we did.)


So, the CapOne paperwork came for reaffirmation, we filled it out, KNOWING we were upside down, knowing that payment wasn't comfortable. I mean, we could make it, but we would have NOTHING left, and this was going to be after bankruptcy? Looking back now, I see how that didn't make any sense. But I was wrapped up in the freak out of it all, mortified we were filing bk, wanting to keep as much of my life as normal as possible. And I guess even if that meant keeping an upside down loan? My mind wasn't being all that logical at that time.

CapOne had to file it with the court and THEN the judge was going to have to OK it - if he thought it was not a financial burden. We never got that far, as CapOne did NOT file the reaffirmation paperwork with the court!!! I was shocked!! I'm sure they meant to, but it just didn't get done. This was in the first year after the new laws before case law started showing ride-throughs were still allowed, so I don't know if CapOne (and other lenders) are more organized now.

Once CapOne realized they messed up by not filing in time, they became all sweet and sugar and niceness, thanking us so much for continuing our payments. (Because now, they were screwed if we didn't pay - the debt was discharged and we legally owed zero. If we wanted to keep the car though, we had to continue making payments, which we did until everything started breaking/going wrong. The estimated repair bill was over $2000 PLUS we were major upside down, to the tune of $6000 or so upside down.)

~~~~~~~~~~~~~~~~~~~~

So, were I you, I would do this: If it is true you MUST reaffirm in MI....

1. Have you done a budget for after BK? Can you EASILY afford that payment?

2. Are you upside down on that loan? Some people do have significant equity, so that not only changes the equation, but also might throw them into an Asset Chapter 7, where they have to pay to keep those things.

3. With your clean slate, would you purposefully go buy a car upside down? Knowing it would continue to be more and more upside down as it depreciated? Would you knowingly pay too much for that house in today's market?

4. If it is a vehicle, does that vehicle mean so much to you (and to some people, they do) that it is worth being in a terrible debt position on a depreciating asset going forward?

5. Sit with your spouse (if applicable) and have a business planning meeting - going forward, is it a wise business decision to keep that vehicle/home? Try to remove all emotion. Because once you get to the other side, you will just have the business side of it staring at you if you have major debt that followed you.

~~~~~~~~~~~~~~~~~~~~

If you are upside down, I would let that car go, for sure. Just keep paying on it, refuse to reaffirm, and wait until they come get it. If they don't ever come get it, you just keep making the payments and you are fine. If they do come get it, buy a beater at that time if you have to, until you can get something nicer. But the point is - do not keep something you are upside down on!! Remember in our case, CapOne had us terrified, and in the end, we had to leave the car at the sheriff's department and notify CapOne where to find it. They simply wouldn't come get it, and it was sitting in our side yard. All that huffing and puffing they did and they were NOT honest. Just tactics.

TEW keeps saying this repeatedly - (and consider our case) - what if something happens. We had a car fall apart yet we still owed $16,000+, and it was in such poor condition that it sold for $4000 at auction. Husband got transferred and we had to move. Our house was also upside down at that point. Had we reaffirmed the home, we would be sitting here in our new town, with our old house still on the market, paying 2 housing payments and wondering how much of an upside loan we would have to drag behind us for the next 10 years to get out of this.

When we were in the middle of our bankruptcy, I was insistent that we keep our life as normal as we could for the kids. We could NOT lose our home, we could NOT lose our car. Because of me, frankly, we almost made 2 hugely financially disastrous decisions (reaffirmations of car and home) while in the middle of the biggest financial disaster someone can go through - bankruptcy.

I just couldn't think straight during it, heard all the horror stories, plus was suffering medically. Our life was one big disaster at the time. Thought no one would rent a home to us. Thought I couldn't get a car loan if I needed. Didn't do a "post-bankruptcy" budget to see if we could afford to keep those upside down loans. Just had to keep them. So I understand all of you that feel this way. I truly do. We lived in a tiny rural town where everyone knows your business, yada yada.

As far as the house goes, as I have mentioned, we could have lived for 8 months without paying a dime once we knew we were giving the house back. That is how long it took for the bank start and finish foreclosure proceedings. The minute your bank promises they are coming for your home (or car), stop making payments, save that money, and use it to move forward.

I am NOT a lawyer, this is not legal advice. I am just a person who might be sitting here with major debt had I followed my own gut feelings during the wrenching emotional process of bankruptcy. I had to repeat all day long - this is a business decision, this is a business decision, this is a business decision. I couldn't believe I was welching on our loans. I thought I was lower than dirt. Even though I was jobless, in a medical mess (and now disabled, it has gotten so bad.) We are in our early forties with teenage children - our entire life ahead of us. We have time to rebuild, we have time to plan for retirement. Had we hung on to upside down cars or homes, that would have severely affected and limited our future.

I had to work hard to cut some cords during the process. I had to realize what I drove or where I lived did not define me. We had spent too many years living above our means, just knowing we would make more next year and pay it off. I'm sure that sounds familiar to many.

Sorry for the novel - I just feel passionately about this. Why would someone go through bankruptcy if they reaffirm and keep their debt (particularly on depreciating assets, which can be homes in today's society if you purchased just a few years ago.) Bankruptcy is your magic button, you get to erase it all IF YOU LET IT.

I don't know why your lawyer is stating that - hopefully he is a really good lawyer and not a "lazy" one who doesn't want to work hard. Ours was willing to fight. A "good" lawyer knows the recent case law in your state, has a good relationship with all the trustees in your district, therefore knowing full well what the trustee's are likely to do. All those things are so important. (There are many lawyers who are SO BAD that the trustees can't stand them, the trustee's know that everything that lawyer files will be wrong/incomplete, etc. Going and watching a 341 prior to filing/picking a lawyer can be one of the best things someone can do and a great way to figure out what lawyers to avoid.)

I can't imagine in Michigan with the crashing of your entire state economy, foreclosure after foreclosure all around you, that your lenders would truly come take your assets if you were making payments. I would really really research this, get other opinions, whatever I had to do. I do know some people sign reaffirmations but then rescind them within the 60 day period of time you have to change your mind. I never researched that enough to fully understand it, but if you did that, it might buy you some time to make other plans.

It could be that you have significant equity and your lawyer knows this is the only way to protect your assets? I'm sorry I do not know your personal details. In our case, we had no equity in either house or vehicle. Obviously our car lender wanted us to reaffirm so they could make us pay that loan - no one else was going to give them that much money! lol

Good luck to you.

[lillaimof2kids]

I did NOT reaffirm on our house loan. It IS being reported on our credit report. I CAN walk away if I need to. Hopefully I never need to walk away, but with the economy the way it is who knows. I'm watching out for myself right now.
I don't feel anyone's job is secure right now. Could I lose my job tomorrow, yep! Could DH lose his job tomorrow, yep! Right now DH is in environmental work, getting about 20 hours/week! He starts a new job Monday back in the sanitation business driving truck (not what he wants to do). The hours will be there. Is it secure? Hell if I know, hopefully! Huge corporations are tumbling, I trust nothing right now.
Boy am I glad I didn't reaffirm!

[Mi Bankruptcy]

Yeahdischared,

Thanks for your time and sharing your experience. I plan to reaffirm everything. Here's the reason. I exempted our tax return. The tax return will pay off both vehicles. My house is worth what we owe. My attorney was very impressed at the amount our house payment was( includes taxes and insurance in escrow). I do have equity in the house. In fact, you can't rent for what we pay monthly. My wife never understood when I bought the house and they were trying to put us in a low Var rate why I fought for a higher fixed rate. Now with the market and foreclosures she understands. Of course, we bought our home with pretty much no money down in 2001.

TEW and HMM are proponents of not reaffirming and it makes sense in most of the cases I hear. My attorney scared my wife into thinking we need to reaffirm the home. However, if I can get away with not reaffirming. I may go for it. I just need to find a law that defines we have to reaffirm. My attorney was referenced through the Trustee's law firm. My 341 is not for a couple of weeks. So, I have time.

[Keebler]

Yeahdischared,

Thanks for your time and sharing your experience. I plan to reaffirm everything. Here's the reason. I exempted our tax return. The tax return will pay off both vehicles. My house is worth what we owe. My attorney was very impressed at the amount our house payment was( includes taxes and insurance in escrow). I do have equity in the house. In fact, you can't rent for what we pay monthly. My wife never understood when I bought the house and they were trying to put us in a low Var rate why I fought for a higher fixed rate. Now with the market and foreclosures she understands. Of course, we bought our home with pretty much no money down in 2001.

TEW and HMM are proponents of not reaffirming and it makes sense in most of the cases I hear. My attorney scared my wife into thinking we need to reaffirm the home. However, if I can get away with not reaffirming. I may go for it. I just need to find a law that defines we have to reaffirm. My attorney was referenced through the Trustee's law firm. My 341 is not for a couple of weeks. So, I have time.

I tend to agree with your logic because my reasoning had been very similar to yours. Also like you, our mortgage is unusually low at $450 a month and we have about 40% equity in our home if you assume its worth approximately what the property tax valuation is. There was never really a real estate boom here so I'm not too worried about a collapse making me upside down.

Let me ask you the question this way... What do you think reaffirmation will do for you that refusing to reaffirm won't?

You may need the car payments to help pad your expenses and help avoid the appearance of having disposable income. In this regard, it would be reasonable to indicate a willingness to reaffirm your house and cars as I did. (Well, one car and the house.)

The cars are simple! If you expect to be able to be able to pay them off with the tax return you've exempted, you should clearly not reaffirm those. Why? In the unlikely event the lender comes to tow them away you can simply pay off the loan and the problem goes away. The chances are good that you won't need to bother and monthly payments will be perfectly acceptable to your lender.

The house is more troublesome. Fortunately for me, the bankruptcy judge forced the outcome I hadn't chosen for myself. Unlike automobiles, nobody in the bankruptcy system expects you to get thrown out of your affordable home for failure to reaffirm.

[Mi Bankruptcy]

I tend to agree with your logic because my reasoning had been very similar to yours. Also like you, our mortgage is unusually low at $450 a month and we have about 40% equity in our home if you assume its worth approximately what the property tax valuation is. There was never really a real estate boom here so I'm not too worried about a collapse making me upside down.

Let me ask you the question this way... What do you think reaffirmation will do for you that refusing to reaffirm won't?

You may need the car payments to help pad your expenses and help avoid the appearance of having disposable income. In this regard, it would be reasonable to indicate a willingness to reaffirm your house and cars as I did. (Well, one car and the house.)

The cars are simple! If you expect to be able to be able to pay them off with the tax return you've exempted, you should clearly not reaffirm those. Why? In the unlikely event the lender comes to tow them away you can simply pay off the loan and the problem goes away. The chances are good that you won't need to bother and monthly payments will be perfectly acceptable to your lender.

The house is more troublesome. Fortunately for me, the bankruptcy judge forced the outcome I hadn't chosen for myself. Unlike automobiles, nobody in the bankruptcy system expects you to get thrown out of your affordable home for failure to reaffirm.

Keebler- I think you pretty much hit the nail on the head. We ended up being about -500 on our Schedule. Our attorney asked if we were to have to explain why it would not be an undue hardship for us to reaffirm. My explanation was. We pay off the cars with the taxes. Lower our full coverage insurance for both vehicles and we should do O.K. Well, As I said before with the tax return It would be paid off. Since we have not had our 341 and are under the presumption that the Trustee will let us keep our taxes we will most likely receive our taxes back prior to even having to sign a reaffirm for the vehicles.

I am still on the fence for the house.. I may try to put it off unless Wells Fargo gets nasty about it. I have not seen too many threads or posts about Wells fargo being nasty. If I have to reaffirm I will, for the simple fact I can't find a cheaper place to live.

The wife does not work. So, if crap hit the fan we could both get min wage jobs to make the mortgage payment. One of the things I did was set up automatic debit for the mortgage. I told my wife I never wanted to play around with the house payment. That's not to say the bank account was never negative because they debited my account when I didn't have enough in there to cover my payment. In the end the house payment was always the priority everything else was secondary.Thus I was always on time. Plus, I set it up to be deducted on the 15th of every month ( less bills due) The day before it shows as late.

With Credit card debt, hospital bills going into collection I anticipated a bleak future. So, I acted and filed BK before our back was against the wall. A business decision.. pure and simple.

[lillaimof2kids]

TEW and HMM are proponents of not reaffirming and it makes sense in most of the cases I hear. My attorney scared my wife into thinking we need to reaffirm the home. However, if I can get away with not reaffirming. I may go for it. I just need to find a law that defines we have to reaffirm. My attorney was referenced through the Trustee's law firm. My 341 is not for a couple of weeks. So, I have time.

My attorney tried to scare us into reaffirming also. I didn't fall for it. My 1st mortgage didn't want reaffirmation papers done, our 2nd mortgage did. I told our attorney there was no way in hell I was signing any reaffimation papers. Atty said they would forclose on us, blah blah blah blah. Not once have I heard a peep from our 2nd mortgage co. I pay on time and always have. Both mortgages are reported monthly, even though my credit reports says I filed BK7. It just has a note stating that we're paying as orginally agreed upon (something like that).
You're right though, check the laws and make sure it says you MUST sign. In Ohio we don't have to sign. Best luck to you!