Does loan mod after Ch 7 reinstate my liability?

[goodtimes50]

The title basically says it all. I'm in the process of filing ch 7. I had to miss my June mortgage payment in order to pay the attorney and they're already calling me about doing a loan mod. We'd like to stay in the house, at least for a while, so I'm interested in exploring the idea. What I want to find out is if moving forward with a loan mod will make me liable for the debt after it has been discharged? That would definitely be a deal breaker...

[Sweetpea3829]

No. Absolutely not. Make sure you double check the modification paperwork (there have been some stories of banks using sneaky wording that makes it seem like you're on the hook again), but even if the bank tries that...they cannot put you back on the hook without you signing reaffirmation paperwork and going through an attorney to do so. Or if you refinance...but a modification and a refinance are not the same.

[goodtimes50]

Great, that's what I was hoping to hear. Thanks!

[justbroke]

To add to what is already accurate... a reaffirmation agreement can't be entered into after the discharge (period). Even if they put in wording that it's a reaffirmation, it would be void and null since you can't have a "back-door" reaffirmation.

Modifications are just that... a modification. They are not reaffirmations despite any language contained in them. A reaffirmation is a very specific process with very specific paperwork and a very specific coversheet.

[goodtimes50]

I was actually more worried that they could slip a refinance through under the guise of a modification. In other words, I'm not worried about unknowingly reaffirming, I'm worried about unknowingly refinancing.

[justbroke]

They can't do that either. That would be a "back-door" reaffirmation. You could easily get it quashed by re-opening your case in the bankruptcy court. The courts really don't like creditors playing games with discharged debt. So much so, that the large(r) banks place language in modifications that restate that it is NOT a reaffirmation of debt (for bankruptcy clients).

A refinance would require an entire new loan package with new loan documentation including a new "Promissory Note" and a new "Mortgage" or "Deed of Trust". Most modifications are only 1-2 pages. If you're signing things and they sent a notary to you, and you see things like disclosures, a HUD-1, a Good Faith Estimate, Truth in Lending disclosures, Riders, Right to Cancel/Rescind, then beware!

[goodtimes50]

Very helpful, thanks!

[CCsAreEvil]

Actually, I had to have my papers notarized, but it also included a Bankruptcy Rider doc which states that if the loan was discharged in BK, then this is not an attempt to collect a debt ... type wording. I don't have the doc in front of me right now, but usually, a BK rider "should" be part of loan mod docs.

[justbroke]

Yes, modification documents are always notarized. My concern was if they schedule someone to come to your home to notarize them, then beware. I just wouldn't put it past some -- ankle biter -- creditor to send a notary to the house to "sign" some docs.