Legal Questions

Mr. Brewer and Mr. Caldwell are two of the most experienced consumer bankruptcy attorneys in this State, and both a re well respected. I agree that any mortgage lender who is telling you they will not give you a new mortgage loan to pay off your existing loan just because you did not sign a reaffirmation agreement is just not wanting to lend to you. There is no legal requirement that you sign a reaffirmation agreement on a past mortgage in order to get a new mortgage. Your current lender an refuse to work with you further, but a completely different lender cannot say they won't give you a new loan unless you go back and do the impossible. It is way too late to go back, and had you requested a reaffirmation in 2009 the Judge would have said no". In the Middle District of North Carolina the Judges do not routinely agree to reaffirmation agreements on residential mortgages.

All of the prior attorneys have provided excellent information to you. In North Carolina, it is extremely rare for a reaffirmation of real estate in a Chapter 7 case. Also, in the Middle District of North Carolina (I believe that you are in the Middle District) it is doubtful that the Bankruptcy Court would allow you to reopen the case to enter into a reaffirmation agreement. The purpose for filing Bankruptcy is to get rid of debt. One can reaffirm debt; however, there are numerous protections in place to protect the debtor in the reaffirmation process. Lastly, there are strict deadlines to file a reaffirmation agreement. I believe that the North Carolina Bankruptcy Courts have taken the position that a reaffirmation agreement cannot be filed after a discharge has been granted. Contact the credit reporting agencies and demand that the agencies place your payment history on your credit report. At a minimum you will have a record--letter dispute that you contested the issue of non-payment. It appears that you have a lender or broker that does not understand Bankruptcy. Most creditors do not report payments to the credit reporting agencies when a debt is not reaffirmed. This is not legal advice. Only by reviewing all of the information in a case, can legal advice be given. The full facts cannot be disclosed on this forum. I am licensed to practice in the Commonwealth of Virginia and the State of North Carolina.

Not reaffirming a mortgage is the normal choice and, usually, the best choice in bankruptcy given that (1) many home are "under water" and (2) many states hold a homeowner liable for any post-foreclosure deficiency on the unpaid mortgage. As noted, I'd keep looking for a different lender. I know they exist from the comments of a past client that had the same issue. Further, this is a very common issue. I wrote a quick article on the subject attached below that might be of some assistance.

Keep trying different mortgage companies. As Mr. Brewer indicated, reaffirmation of a mortgage is rare and nearly impossible in NC because, even if your attorney was stupid enough to sign off on it, the vast majority of our judges will not approve reaffs on mortgages unless the reaff is really a modification that significantly changes the mortgage terms in favor of the debtor. Also the bk laws require that a reaffirmation of a debt be filed within 45 days of the first setting of your 341 meeting which was at least 5+ years ago. No way would a judge allow you to reopen your case to reaffirm a mortgage this far down the line. I have had a number of Ch7 debtors buy new homes after they had previously walked away from (surrendered) a prior loan/home. Keep trying.

Your Bankruptcy filing is a "blemish" but surely you knew that going in. That is over and done, and you can wait out the 10 years on your credit report. That does not mean there are not other consequences of the filing, and this is one of them. You did the right thing, but that does not mean everything will be perfect. The reaffirmation issue is over and done. Keep speaking with lenders - that is all you can do. Many people lose their homes in BR (or outside BR), so they are not thinking about a "dream home."

You can re-open your bankruptcy case and file a reaffirmation agreement. You would have to file a Motion to both re-open the case and set aside the discharge (and there is a filing fee for that). After the case is re-opened you can file the reaffirmation agreement and then reinstate the discharge and close the case. At that point you would have the credit history necessary for your new purchase.

Don't let anyone tell you that reaffirmation of debt is needed to establish credit, that is not true. Reaffirmation of real estate in a Chapter 7 is the exception, not the rule, I have never signed one personally in more than 500 cases. You may want to update your credit report to show the payments were made on time. But find another mortgage company this one seems to have difficulty understanding basic concepts. PS it is far to late to reopen the bankruptcy to file a reaffirmation.