Question Reopening case after discharge on ch. 7

[Jailhouse]

A reaffirmation agreement was not filed during the alotted time frame. Therefore the debtors colateral was not reaffirmed.
In some cases the creditor is ok with what is called "Pay and keep", in which case, as long as you keep paying on your debt (Car, motor home, furniture...etc.) you can keep it.
In this particular case, the debtor is applying for a hardship from the creditor, in which case the creditor wants the back payments brought current and a valid reaffirmation agreement filed with the court, in order to apply for the hardship program.
In the Central District of California, the website for the Bankruptcy court does not have a Judicial Counsel Form, for re-opening a case in order to file a reaffirmation agreement. Therefore our office must plead the notice and the motion and request to re-open the case.

Has anyone in this forum ever encountered this problem or anything similar?
If so, please advise. It is going to make this task alot easier!!!
Many Thanks!

- Jailhouse Attorney

[HHM]

Are you talking about a mortgage...

VERY BAD IDEA. It is NOT a requirement for any sort of modification etc. that the borrower reaffirm. If the lender wants the person to be liable, the lender should refinance the loan. Otherwise, tell the lender to "f" themselves. and have the client look at alternatives.

[blondeinmn]

According to jailhouses post, it seems that the poster is an attorney. If a reopening of the case is pursued for a reaffirmation of a mortgage solely to qualify for a modification perhaps jailhouse should set aside the legal fees from this case to pay for an attorney to defend against a malpractice suit.

[Jailhouse]

No, no, no.... you guys got it all wrong!
I am not an attorney, however i do work for a very reputable attorneys office. If you are confused by the signature "Jailhouse Attorney", it was a clever name i came up with refering to an inmate, who through self study of law, assists fellow inmates.

My original question is concerning a debtor who has a motorhome that was not reaffirmed during the opened Ch. 7 case. The debtor is requesting a hardship modification (lower payments for a short amount of time, in order for the debtor to get back on track). However, the lender is not willing to refinance (the motorhome's value is close to what it owed or a little more than what is owed), is not willing to enter into a new contract and will only initiate hardship program if the payments are brought current and the debt is reaffirmed.
Since this is the debtors only home, she has to keep it, therefore we must re-open the case to reaffirm.

I am researching procedure to re-open the case, and since this site has been helpful in the past, especially HHM, i figured i would ask around.

[SMinGA]

I see some issues.

They cannot afford the original payments (demonstrated by the fact they are behind) - want the mod to lower the payments to something affordable. Lender wants a reaffirmation & the missed payments caught up before they will do a mod. There is of course no guarantee on a mod. So if this goes thru according to what you say, they will pay to reopen the case, reaffirm the loan, be on the line for the higher payments and be SOL down the road if/when the lender refuses to reaffirm. Not only will they lose their home - but they'll owe the lender since the debt was not discharged in bankruptcy.

Can they even afford to catch up on the missed payments, if this were to all work out according to plan?

And it also seems they filed ch. 7 on a secured debt (that they wished to keep) when they were behind. Not a good idea. If they truly cannot afford their current payment, it might be time to face the music and start looking into other living arrangements.

[HHM]

I agree with SMinGA, in the big picture, I don't see that reaffirming a loan on a "motorhome" is in the client's best interests.

Also, I am not sure you actually can re-open to reaffirm. These things must be done within a certain timeline of the 341 meeting. See 521(2)-(5). Also, see 524(c)(1) requiring the agreement to be made and granted BEFORE discharge. So, I don't think you actually can simply reopen to reaffirm.

Also, it is very unlikely the court would approve it; in order to approve the reaffirmation, the court needs to make a finding that the reaffirmation agreement WILL NOT create a hardship. But by very definition of this circumstance, there would be a hardship to reaffirm.

However, there is no special form or anything (perhaps some local districts have a form), all you do is file a Motion to Reopen, explain why the case needs to be reopened, and the judge will either grant it or he won't. You will want to look at your local bankruptcy rules for guidance, it will probably be local rule 5010.

Time for the client to face the music. The person could file a chapter 13.

[Jailhouse]

All the replies i have received are very good questions and concerns, that address the benefit of the debtor. Which is great, but none seem to address the direct reason for the post.
The intention of the post was to gain helpful information on the proceedure for re-openeing a Ch.7 case in order to file a reaffirmation agreement.

To once again stray away from the intent of the post and answer your questions SMinGA....
The debtor was current on the payments at the time of filing. The collateral in question is not a home mortgage, it is a motorhome.
The debtor just went through a divorce and is living in the motorhome as the only means of a home.
The payment on the motorhome is approx. $400- $500 dollars. Much cheaper than any rent that can be found anywhere else.
The debtor has borrowed money to get current on the 3 payments that are behind (which are not full payments, only partial amounts, because the debtor has been paying what can be afforded).
And the creditor has confirmed that as long as a reaffirmation agreement has been filed, and the payments brought current or at least with 30 days delinquent, they WILL approve the debtor for the hardship program, which is 6-12 month reduced payment plan.
And the debtor is perfectly happy with that sort of workout program. The debtor is recently divorced, looking for a job, and feels like a temporary help for 6-12 months is exactly what is need to get back on track.

Furthermore, i agree with what you are saying that if the debtor cannot afford the payments now, then maybe needs to look for other options. However, as i was explained this is the only option. And.... due to the fact that the debtor now has no other debt.... this is the only obligation.

[Jailhouse]

HHM,
I agree with you. The fact that the debtor needs to apply for a hardship program after reaffirming the debt, which is not supposed to cause a hardship, is a double negative!
But as i inidicated in my post... it is the only option for the debtor.
It is the only place the debtor can live... and it is affordable.
I told the debtor "if you cannot afford the payments then you must do something else", and the debtor started crying on the phone with me.....
The debtor explained that once the debtor finds a job.... everything will be fine.
I understand where the debtor is coming from and have sympathy for them.

It seems like not many have encountered this problem. I am going to file the motion today and will keep everyone updated on the progress.
Thanks
- Jailhouse

[Rick9972]

If I remember correctly a motorhome is treated as a vehicle in most states. Thus,the reaffirmation agreement can modify the loan. This is the way we did our vehicle. Told them we did not want it and they asked us to make a offer. Reduced the balance a little bit and cut the interest rate in half.