Is this just plain stupid?

[jupitert]

I have friends who are filing CH7 in Florida. They own a house, with 2 mortgages. 1st = ~200k, 2nd = ~ 80k. The home is worth at best 150k.

They are reaffirming the both mortgages. Apparently they are attempting to strip the 2nd, but I am fairly confident a ch7 lien strip isnt likely to be approved.

I tried talking them out of the reaffirmation, but their logic is - once they get rid of the credit card payments, that they will be able to afford the mortgages.

I told them that by reaffirming, they are essentially purhasing a 150k house for 280k. Who in there right mind would do that? But they wont listen.

So..who's the crazy one..me or them???

[Faust]

It sounds like a poor choice to me.

[NoMoreCards]

Chapter 7 typically does not include lien stripping, I wish it did!

Unfortunately there are plenty of people who have reaffirmed their mortgages only to lose them later and be held liable for the debt. Job loss and such DOES happen.

Your friends should NOT reaffirm, and if their lawyer recommends they do then he/she isn't worth their weight in salt. Most respected lawyers will never recommend reaffirmation under such conditions.

Perhaps your friends should go talk to a few different attorneys to get other thoughts on this, before they do something they may later regret.

[HHM]

Dumbest plan ever...(well, maybe not ever), but they are getting some poor advice or are just too stubborn to listen.

[jupitert]

I think their choice is a mixture of stubborness and that of a status symbol.

You see - they also are reaffirming an Expedition with a +$700 monthly payment, which I am sure the car is underwater equity wise.

I think that they feel if they keep the house and the car, then the BK filing will go unnoticed by their peers.

As a friend, I tried to talk them out of it, but all they kept saying was they will be able to afford the payments once the credit cards are gone.....oh, and also after the husband lands a good paying job. He currently makes minimum wage. So why they would want to be legally tied to these large monthly payments is beyond me.

[NoMoreCards]

In many districts they must have either their attorney and/or a judge approve a reaffirmation.

Hopefully, maybe someone will save them from making the biggest financial mistakes of their lives.

[Faust]

"Pride goeth before a fall."

[seFlaDude]

Wow, that sure does'nt seem very wise

[StartingOver08]

Their is financial suicide.

If they are worried about how it "looks" to others more than getting a fresh start, then they have more issues than financial issues to work through. They can achieve (if that is the proper word to use here ) the same thing by riding through on the vehicle and not reaffirming the debt and paying through on the house. They can NOT even renegotiate the house loan if they reaffirm.

I sincerely hope neither their attorney nor the judge will sign off on any of the reaffirmations to save them from themselves.

[Chucksoutalu]

WoW! There aint learned the lesson yet! There pilin on years of head and heartache

[helpmeout]

How do they expect to strip the second when they are reaffirming it? That makes no sense. Just like keeping the house makes no sense.

[AngelinaCatHub]

I think their choice is a mixture of stubborness and that of a status symbol.

You see - they also are reaffirming an Expedition with a +$700 monthly payment, which I am sure the car is underwater equity wise.

I think that they feel if they keep the house and the car, then the BK filing will go unnoticed by their peers.

As a friend, I tried to talk them out of it, but all they kept saying was they will be able to afford the payments once the credit cards are gone.....oh, and also after the husband lands a good paying job. He currently makes minimum wage. So why they would want to be legally tied to these large monthly payments is beyond me.

YOU GOT to be kidding. What is the definition of insanity?

Can't you lead them to this forum. By gunpoint if you have to, and set them down to just read for one hour. Your thread would be a good place to start. I cannot have compassion for such stubborn people. If they are too proud to admit the proper business decision, wait till they take the second fall, lose the house, car and and are rewarded with a Judgment for at least 8 years. I'm not even sure a second C7 would get rid of that stupidity in 8 years. 'Hub

[nc73]

Let them do whatever they want. You can say I told you so when they realize their mistake. I know people that file every 8 years...they never learn or just don't care.

[TeacherMomma]

In many districts they must have either their attorney and/or a judge approve a reaffirmation.

Hopefully, maybe someone will save them from making the biggest financial mistakes of their lives.

We have to go before a judge on our reaffirms (cars) because we were pro per, but had we had an attorney we would not have. So if they have an attorney I bet that attorney won't let them do all that with no real way to pay it....because he might have to answer up later when they end up not being able to pay it, and state they were guided to do so by the attorney. And when we went for our reaff's there were attorneys there with clients that did have to go before the judge because she had questions on why they were doing it, making sure they understood they didn't have to, etc. So either way, it might not happen for them......the cars were the easiest to pursuade the judge to let you keep, from what I saw.

[keptdigging]

They can keep the house by making the payments! In fact, unless the real estate market improves, they can keep the house by just paying the first. Save up some cash an negotiate a lump sum for the second.

And if they can't make the payment on the first, they will still lose the house. The difference is that they'll STILL owe the money.

I think there are different rules from cars...

But they are missing one of the greatest things about Chapter 7 and a mortgage. You get an option. Pay to stay but if you want walk away some day because legally you no longer own the money. The lender is simply entitled to their security interest.