Chapt 7, Reaffirmation and now in a bind!!

[FlaAdvice]

I hope someone out there can help me with some advice.

I live in Florida and filed for Chapt. 7 bankruptcy in 2010. The bankruptcy was discharged in 2010 and I did sign a reaffirmation for my home and vehicle. Although I am married, I am the only one who filed. I was told by my attorney that because I am married I may want to sign the reaffirmation, if not, they may opt to take my home and it could potentially harm my husband's perfect credit. So I signed.

In a nut shell, we have always paid our mortgage on time and in full. Unfortunately, I lost my job due to the economy and have exhausted unemployment benefits. I contacted Chase and asked for a loan modification under the "Making Homes Affordable" program but was denied due to the investor (Ginnie Mae) not participating in mods. They also said, due to my perfect payment history - we do not qualify. A person must be 30+ days behind.

At this point, we just cannot afford our home any longer. My husband and I are contemplating to just let them home go. This way we can stay in the home while we save $$ and decide where we will be relocating to. Here are my questions:

1. Because I signed the reaffirmation - does this mean Chase can eventually come after me for the remaining debt? And if so, could this become a judgment in which I'll have to always fear a seizure of money from our bank accounts?

2. Is there anyway to remove the reaffirmation now that the case was discharged?

3. If I suck it up and let the home go, knowing Chase will come after me due to the reaffirmation - will Chase or the Bankruptcy courts come for my home?

4. Does having a bankruptcy speed up the process of taking my home from me if I opt for foreclosure?

Lastly, would it be more wise to refinance the home into my husband's name ONLY and then let it go into foreclosure under his name solely so at least one of us has good credit in the near future? I've already brought my score back up to the high 600's since filing. Eventually I guess he could claim bankruptcy and get the foreclosure taken care of but this way we bypass both credit being screwed, maybe?

Thanks!!!

Any help to those questions or extra advice is GREATLY appreciated!!

[helpmeout]

If you want to let the home go into foreclosure, it would probably be a good idea to refinance and get any financial responsibility on your part eliminated (right now, they can come after you even if your husband files BK himself).

And I would make payments for at least 2 years before even thinking about having your husband file bankruptcy.

FYI, a foreclosure will have a negative impact on both of your credit.

[debee]

When were you discharged? There is a 60 day rescission period for reaffirmation agreements.

[FlaAdvice]

You suggest having the refi done into his name only, but why make payment for 2 years before going into foreclosure? Unfortunately, we cannot afford another two years of pymts or else I wouldn't be weighing options now. I'd like to refi to take me off the loan and make payment for 2-3 more months under his name only. Then stop paying and allow it to go into foreclosure. This way it does not affect my credit at all and we've got one person's credit to survive on. I need to do something within the next 60 days. I don't think we can pay much beyond 2-3 months.

BK was discharged in 08/2010 - guess I've definitely passed that 60 day retract mark.

[debee]

What's the house worth vs. your mortgage balance?

[FlaAdvice]

Mortgage is at approx $216k and according to Zillow the MV is at $174k.

[debee]

Is there anyway you can get rid of the house without going through foreclosure - sale, short sale, DIL? (Presuming you would rather tank your husband's credit than have the lender pursue for deficiency.)

[FlaAdvice]

How exactly does a DIL work? Do I just call Chase and say "Hi, I'm broke, your won't approve my mod and now I'd like to opt for a DIL"? Which has more pros, a DIL or short sale.

Once before, Chase offered us a short sale and said they'd give us $2k to move on AND it wouldn't affect either credit reports. Is this true about not affecting the credit? I've got the BK and cannot afford a neg marking due to the short sale. I mean hey, if I'm going to get a negative marking, I might as well make it worth it and do the foreclosure. Live rent free for a period of time and save $$, no?

[Chowder]

I mean hey, if I'm going to get a negative marking, I might as well make it worth it and do the foreclosure. Live rent free for a period of time and save $$, no?

There's some other considerations about future buyer qualifications. DIL, short sales, still take the credit hit, but you are eligible for a mortgage sooner than a straight Foreclosure.

[FlaAdvice]

DIL, short sales, still take the credit hit, but you are eligible for a mortgage sooner than a straight Foreclosure.

^ that I was not aware of. Thank you... Some tough decisions ahead of me. This is ALL due to the fact that my investor, Ginnie Mae, doesn't participate in mods. It's insane. I was in tears on the phone with Chase. It blows my mind to think I do not qualify for a mod bc I'm unemployed. Or how about, you MUST be at least 30 days behind before they will even consider looking at you. Talk about kicking someone when they're already down and have been a well paying customer.

[debee]

I mean hey, if I'm going to get a negative marking, I might as well make it worth it and do the foreclosure. Live rent free for a period of time and save $$, no?

It's true. You could live rent-free and save. But on the other side of the foreclosure, there will be a deficiency judgment waiting. Save now, pay later.

Cost of foreclosure+ mortgage amount owed - whatever they get at the auction = what you are going to owe. That is the bill you avoid if you get them to agree to short sale or DIL.

Your credit gets tanked either way.

[Chowder]

This is ALL due to the fact that my investor, Ginnie Mae, doesn't participate in mods.

Not sure that's true. If it's an FHA loan....this info might be helpful.
LINKY

The mods aren't as sexy as the regular HAMP/MHA style. But they seem to exist.

[BKlooker]

I would definitely try to talk to a foreclosure lawyer in your area before deciding on anything. They also can offer you some advice, and may be able to provide you with assisting in 1) refinancing 2) working out an agreement early on for a short sale, debt in lieu, etc., or 3) preventing as little blow back as possible should you decide to walk away i.e. credit score hits and deficiency.

When i first considered financial help, i actually first talked to an attorney that specialized in the above listed notes (foreclosure, short sale, etc.). But for the fact that I opted for BK instead, he would have been willing to help me with a short sale, etc. for as little as $600 (probably about a grand once it was all over). in so doing, he would have worked with the lender on refinancing and also working on an agreement once I fell behind that settled a set amount of deficiency (say, X percent of what the estimate difference is, generally pennies on the dollar) so i never had to worry about them coming after me later (even though in our state, they only get 2-3 years to come after you for the difference). He also offered to pad in some legal wording in a settlement that said basically the creditor wouldn't report any lates, etc. if we went the deed in lieu rout on my credit report, thus limiting some of the damage.

It's worth looking into, especially since you did sign a reaffirmation agreement (an attorney may be able to find holes in the agreement you signed and challenge it in court, ya never know).

[tcreegan]

Hi all, Hi FlaAdvice,

If Chase has already been receptive to a short sale, that might be the best way to go. Get them to sign a release or agreement to not pursue the deficiency. They also mentioned not affecting the credit report, that means they report 'paid as agreed' or 'paid, satisfied' instead of something negative like 'charged off' 'up yours' etc.

At this point, Chase holds all the cards, best to negotiate with them, see what they are willing to do....

Tom in Colo

[FlaAdvice]

Hi! Thanks for everyone's advice. I really appreciate it. I spoke to my BK attorney this afternoon. He said had I not signed the reaffirm I'd be good to go on the whole "just letting it go" but since I did sign it, they will pursue. (Obviously)

He told me not to worry about the deficiency if foreclosure is what I opt to do. He said to just make sure that as soon as they serve me w/ the papers to get in touch with him. From what he stated, he can fight the foreclosure to avoid the deficiency down the line. What that entails, I have no clue. Obviously, I pay him some good $$ and he handles the rest.

I'm going to give Chase a call tomorrow and see what the DIL involves and how badly I'll come out of it at the end. Have any of you gone through a DIL process before?

As for a short sale - I never have and never will trust a BANK. They may say they won't report it negatively but one slip up and I'll never get something like that off our reports. CB's are the worst to deal with on minor issues, I can imagine something major like this would be near impossible. I'd have to fight tooth and nail for Chase to go back and correct it. I doubt they'd so kindly fix that after I didn't fulfill my loan obligations. I hate to sound negative but I am far from trusting what a bank tells me. Banks are for profit & that goes for any way, shape or form. They don't care about real people beyond their investors.