Reaffirmation Insanity -- VERY long

[Rrandom]

First off, a little disclaimer: I have no idea how I could apparently have had such a monumental level of stupidity, complete lack of legal (good) advice and total "head in the sand" attitude. My only defense being relative youth and the trying emotional situation I was going through at the time.

I filed for Chapter 7 bankruptcy on September 26, 1996 -- yes, nearly fourteen years ago -- due to a pile of debt and the fallout of a not-so-great marriage. I opted to reaffirm both a vehicle loan that my grandfather had co-signed and my one year old mortgage. I believed that the bank would come after my grandfather if I discharged the car loan and I truly felt that the only way to keep my home was through the reaffirmation process. A note on the home: It was a trailer (oops, mobile home) on a rented lot in a park. The note was at a high interest rate. The home was upside down. As a single parent I could barely afford the payments. Did I mention the rented lot that was nearly as much as the mortgage ? I had no idea such a thing as "ride-through" even existed.

In any event, the reaffirmation agreements were drawn up and I signed them and the lawyer forwarded them along to the lenders on November 20, 1996. Ford Motor Credit signed the vehicle reaff and filed it on December 20, 1996. GreenTree, the mortgage company, did not file the mortgage reaffirmation agreement until February 3, 1997. The February filing ended up being nearly three weeks after the discharge. Timeline as follows...

09/26/1996 Bankruptcy Filed/Petitioned
09/30/1996 Notice of 341 Meeting
11/14/1996 Final Report of Trustees
12/19/1996 Ford Motor Company Reaffirmation Filed
01/16/1997 Discharge of Debtor
02/03/1997 GreenTree Reaffirmation Filed


Of course, I was blissfully unaware of any of this and went along my merry way believing that a reaffirmation exactly matching my current mortgage/payment schedule was in place. I struggled for nearly ten years making the mortgage payment, received the normal monthly "bill" from GreenTree, had on-line account/billing and, when I was late (which was more often than not), TONS of phone calls, late fees and, at one point, even a "server" showing up at my door to collect my payment. After even one day late, GreenTree would call up to half a dozen times a day, every day, until the payment was "caught up".

Sometime during the tenth year, and shortly before I bought a new home and had to convert the 'ole trailer to a rental as it was so upside down it was unsellable, I received a call from a GreenTree rep asking what my intent was with the property. I stated that it was my primary residence and didn't think anything about it. This type of phone call kept reoccuring and I finally questioned the agent as to why they were inquiring about this. He stated that the home had been included in a bankrupcty with no reaffirmation and I was "squatting" so they were trying to determine whether to take the property back.

Needless to say, I was very surprised (and, not ashamed to say, somewhat elated). I contacted a "general" lawyer to inquire into my legal rights. The lawyer took a retainer and contacted GreenTree. GreenTree supposedly acknowledged their mistake and told him they would file the reaffirmation -- ten years after the discharge. GreenTree even offered to make sure all my payments were correctly reported to the credit bureaus. Not knowing any better, I took my new lawyer's and GreenTree's word and grudgingly let it go.

Fast forward another three years and some research courtesy of the lawyer known as Mr. Google and I came to the belief, biased in my own favor, that a reaffirmation agreement had to be filed before the date of discharge or within the 90/60 day windows of the 341 meetings. GreenTree's file dates didn't meet any of these litmus tests.

I retained yet another attorney (bankruptcy this time) to verify my findings and he has not been, to this date, a fountain of information. He will not definitively state what the true deadlines of filing a reaff are nor what my "rights" should be. He was able to obtain a copy of the original reaffirmation agreement and bankruptcy filing. The lawyer's only advice at this point is to stop paying and "see what they do".

Reading the original reaffirmation agreement was a complete eye-opener (refer to my opening paragraph about stupidity). The reaffirmation agreement was for the remaining owed amount on the mobile home paid in installments of $119/month... much less than the $460 a month I was billed for and paid for the last fourteen years. In fact, the address of the property listed on the reaffirmation agreement does not remotely match my property nor does the property description. GreenTree never even provided a copy with their signature to my original bankruptcy lawyer. Over the course of the fourteen years since the bankruptcy, I have paid much more than the total owed as outlined the reaff. I know...read and know what you're signing.

Currently, I am renting the property for $200 less than the combined mortgage/lot rent. Nothing like bleeding red every month. I am fourteen days late on the most recent payment (and have received upwards of fifty calls).

Here are my questions to this community:

1. Is a reaffirmation agreement filed after the discharge date valid ?

2. If a reaffirmation is NOT valid and a lender continues to collect the debt (including billing statement, phone calls, on-line billing, late fees, physical collection) what are someone's rights under the law ?

3. If a reaffirmation IS valid, can a lender then ignore it and attempt to collect more money by the above methods (billing, calls, etc...) ?

Yes...as ignoble as it is... I want to walk away from this property. Being somewhat vindicative (as far as GreenTree is concerned at least), I would not mind finding out that GreenTree violated a ton of laws in regards to this reaff over the years.

Thanks in advance for any advice!

[IBroke]

So do I get that right? They charged you (and you paid) for a loan that wasn't yours for more than a decade? Wow!

I can't tell you for sure if the agreement is valid - the point is that the agreement obviously is about a different property. THAT'S what is shocking. They at least need to refund the money you "overpaid". No matter if it's valid or not. You obviously weren't living at the place you paid for, right?

You have to dig very deep on that one - I hear $$$ coming..

[tcreegan]

Hi Rrandom,

Here are my questions to this community:

1. Is a reaffirmation agreement filed after the discharge date valid ? Unfortunately the important date is the filing date, 9/26/96. A contract signed after this date is enforceable.

2. If a reaffirmation is NOT valid and a lender continues to collect the debt (including billing statement, phone calls, on-line billing, late fees, physical collection) what are someone's rights under the law ?

3. If a reaffirmation IS valid, can a lender then ignore it and attempt to collect more money by the above methods (billing, calls, etc...) ? Nope, the lender has to abide by the terms spelled out in the contract. I am not a lawyer, but it sure seems like you would have a case against GreenTree

I would hazard a guess that they have also broken laws under the Fair Debt Collection Practices Act (FDCPA) This is a great website for info on FDCPA and how it works:

http://www.privacyrights.org/fs/fs27-debtcoll.htm

Hope you can get things sorted out....finally....

Tom in Colo

[justbroke]

1. Is a reaffirmation agreement filed after the discharge date valid ?

Yes, it is, so long as it is "entered" into before filing. A Reaffirmation Agreement must be entered into before 60 days after the first scheduled 341 Meeting of Creditors and definitely before the case is discharged (period). It has been found that entering into the agreement, and not necessarily having filed it with the court, is enforceable. HOWEVER, once the discharge is entered in the case, a reaffirmation agreement can't be entered into or it is void.

Let me make one important point. The rules and law read only that a debtor need to "enter" into a reaffirmation agreement before the discharge is entered. It does not indicate whether the reaffirmation needs to be filed! It is arguable that a signed reaffirmation agreement is enforceable, even if not filed, so long as it was signed by the debtor and the creditor between the time of filing and the discharge being entered. Having wrote that, this specific creditor has problems because the reaffirmation agreement is WRONG.

Any creditor that pressures the debtor to re-open the case to revoke the discharge or to have the post-discharge re-affirmation agreement entered, is in violation of the discharge injunction!

2. If a reaffirmation is NOT valid and a lender continues to collect the debt (including billing statement, phone calls, on-line billing, late fees, physical collection) what are someone's rights under the law ?

It's a violation of the discharge injunction! You should be able to re-open your case and file a Complaint for Willful Violation of the Discharge Injunction and receive damages of $1,000 per bill, $250-500 per phone call, and $1,000 per letter. However, if those items had the language "this is for information purposes only", then they correctly did their job. However, they shouldn't have called you and demanded payment. They could, however, send you notice that they are accelerating or preparing to accelerate your Note and will foreclose. You should be able to get a "smart" and "effective" bankruptcy attorney to take this case on contingency!

3. If a reaffirmation IS valid, can a lender then ignore it and attempt to collect more money by the above methods (billing, calls, etc...) ?

Your re-affirmation is probably not valid. Now, the FRBP (Federal Rules of Bankruptcy Procedure) do allow a judge to "enlarge" the time to file a reaffirmation agreement. They usually do this by holding the discharge though.

Yes...as ignoble as it is... I want to walk away from this property. Being somewhat vindicative (as far as GreenTree is concerned at least), I would not mind finding out that GreenTree violated a ton of laws in regards to this reaff over the years.

You might just have a VERY good Violation of Discharge Injunction cause of action!

Now, here's the fun part. A reaffirmation agreement is binding on the debtor and the creditor! So, if they granted you the reaffirmation for $115/month and you were paying much more... they owe you the money. I entered into a reaffirmation on one of my cars because I owed less than it was worth and only had 23 months left to pay it off. They entered the interest rate correct, but they took the balance and just divided it by 23 to come up with the payment. That's 0% interest. They messed up! Too bad for them and I will seek to have the agreement enforced in less than 2 years.

[IBroke]

That's how I see it as well. If the reaffirmation is valid, they need to refund what you overpaid. If it's not valid, each billing-statement or attempt to get money from you is a violation of the discharge.

[justbroke]

Either way, IBroke, they have violated something.