Reaffirming Mortgage if you are on a Payment Arrangement Plan with Mortgage Co.

[blueeyz]

I have recently paid my retainer in full to file chapter 7 and I meet with my attorney's office on Tuesday to go over all my documents. In order to pay the attorney, I fell behind on my mortgage payment. I am currently 45 days behind and am on a payment plan. I plan to catch myself up completely by January. Has anyone successfully reaffirmed their mortgage in their chapter 7 while on a payment plan with the mortgage company?

[tobee43]

afternoon blue,

here's an EXCELLENT sticky thread dealing with reaffirming or NOT reaffirming your mortgage...it has a ton of info for you...

http://www.bkforum.com/showthread.php?62833-Why-reaffirming-a-mortgage-is-a-very-very-bad-idea.&highlight=reaffirm

[Mensa1]

Reaffirming a mtg is almost always a bad idea. There may be some exceptions to that statement, but not many.

Additionally, there is a considerable amount of bad advice given on this topic by Attys.

[tcreegan]

Hi blueeys,

To reaffirm when you are having problems making the payment....probably not a good idea. To get the reaffirmation you need your lawyer to sign off on it (which they usually won't) or have it approved by a BK judge. Odds are probably not too good...

Reaffirming is almost never a good idea, maybe if you are protecting a large chunk of equity and have great loan terms and the real estate market is looking up in your part of AZ

Definitely something to get some impartial advice on....

Tom in Colo

[blueeyz]

I am able to make my mortgage payments each month with no problem. It's just that I had to pay the attorney $1500 to finish my retainer which is almost 2 mortgage payments for me so naturally I got a little behind. I will be be caught back up by then end of December. Giving up my home is not an option for me and I understand many advice against it but I am going to keep my house. My interest rate is low and so is my mortgage payment. I could not rent a house for less than I what I pay a month now. I read that you have time to get caught up during the automatic stay so I guess I should be fine. I was just trying to find an answer to my question without being told not to keep my house. I respect everyone's opinion but I really just wanted an answer to this question.

[debee]

Lots of people keep their house. Me included. What the others have been bringing to your attention is the risk - not of keeping your house, but of signing an agreement. It's usually possible to keep your house without signing it. I think the forum members just wanted to make sure you were aware of your options. Everyone supports your personal choice.

[blueeyz]

Thanks Debee. It seems everyone is so against keeping the house in bk. To me, my house is extremely important to me and the thought of losing it is very upsetting. Maybe it's because it's my first home ever and I worked so hard to get this house so it will really be losing a lot for me. This whole bankruptcy thing is stressful enough without thinking about losing my home too. Can't wait until it's all over.

[Pandora]

Thanks Debee. It seems everyone is so against keeping the house in bk. To me, my house is extremely important to me and the thought of losing it is very upsetting. Maybe it's because it's my first home ever and I worked so hard to get this house so it will really be losing a lot for me. This whole bankruptcy thing is stressful enough without thinking about losing my home too. Can't wait until it's all over.

Think long term - what happens if you lose your job? Get sick and cant work? Get into debt again and cant file BK for another 8 years? Etc Etc Etc. You file Ch. 7, reaffirm your house, so now you're on the hook for it, in full, should anything happen down the line. You'll have both a BK and a foreclosure on your record, as well as possible deficiency depending if you're in a recourse or non-recoure state.

You can stay in your home w/out reaffirming the debt - you're just retaining and paying. So as long as you make the payment, you get to stay and keep your home. Your attorney should have explained this to you

[tcreegan]

Hi again blueeyz,

Sorry if you feel like you got gang tackled on the house issue, you have to remember that folks here have heard all the horror stories....

I read that you have time to get caught up during the automatic stay so I guess I should be fine.

No guessing, contact your lender, they have restrictions from contacting you so you have to contact them.
They might be fine w/ it but equally likely they are not OK w/ it.

The other aspect we see a lot on the forum is people w/ an emotional attachment to the house (we sure did, exactly as you posted) and it is hard to see the financial reality. Getting an impartial assessment from someone who knows your local real estate and job markets would be invaluable, you can make your decision w/ confidence and know what to expect in the lon term.

Pandora has the best scenario, no reaffirmation, stay and pay. Either way it is crucial to find out what your lender is planning to do, call them ASAP. Then ask your atty if they would sign off on a reaffirmation, and if not, do they think your bk judge will approve it.

Good luck with this,

Tom in Colo

[blueeyz]

Thanks Tom. Oh I understand the people here have lots of experience and they are just trying to be helpful. I meet with my attorney's office on Tuesday and my house will be a big topic of conversation. I just spoke with my mortgage co. yesterday and they set up payment arrangements through September of 2011 and I plan to be current by mid to end of December 2010. I did ask my mortgage co about chapter 7 and I was told as long as I was keeping my arrangements, they would not foreclose. Well, I am not so sure how much I trust them so I am going to get caught up as quickly as possible.

[bk2009]

If you'll be caught up mid December 2010, can you just wait until then to file? That's only a month away.

[blueeyz]

I was thinking about waiting to get caught up to file but I was served a summons a few weeks ago and I do not want a default judgment entered. I will talk to my attorney about this on Tuesday as well.

[tcreegan]

I did ask my mortgage co about chapter 7 and I was told as long as I was keeping my arrangements, they would not foreclose.

Good job blueeyz, this is the case more often than not, given the real estate market lenders are not very eager to foreclose

I was served a summons a few weeks ago and I do not want a default judgment entered

Not something to worry about, these cases are easy to stall for several months, and even if they get a judgement, you have it vacated after the BK, it goes away.

Tom in Colo

[tobee43]

Thanks Tom. Oh I understand the people here have lots of experience and they are just trying to be helpful. I meet with my attorney's office on Tuesday and my house will be a big topic of conversation. I just spoke with my mortgage co. yesterday and they set up payment arrangements through September of 2011 and I plan to be current by mid to end of December 2010. I did ask my mortgage co about chapter 7 and I was told as long as I was keeping my arrangements, they would not foreclose. Well, I am not so sure how much I trust them so I am going to get caught up as quickly as possible.

many people keep their homes blueeyz, i think the point that pandora was trying to point our is just leaving the "door open" by not reaffirming, because as she pointed out, one never knows what can happened in the future.

however, in many a case, as in with debee and you, just because so many have lost their jobs or their home is underwater by thousands, does not necessarily mean everyone falls into that realm. maybe you can't live for LESS or have equity in your home.

i know many people that do. and others that do not. our experience in our situation was we were way under...and actually today our house (still not foreclosed) is under water over 200 thousand dollars. it will NEVER regain that equity, so the sound business decision was to let it go. but of course, that certainly does not apply to everyone.

i think the point here is that you can still or try to still keep your home and NOT reaffirm...that way in case you do fall into problems in the future, you have a way out.

best of luck to you! i'm sure it will be just fine.

[debee]

... however, in many a case, as in with debee and you ...

I think my post above must have been unclear. Sorry about that. I didn't sign a reaffirmation agreement. I was just trying to let blue know that no one was against her keeping the house. Everyone just wanted to her warn her about the implications of the reaffirmation agreement. I thought there might have been some confusion there. Perhaps I added to it.