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Chapter 7 and Reaffirmation Agreements on a mortgage.
Anonymous2 views3 answers
I am thinking about filing a CH 7 bankruptcy. I have a mortgage through GMAC and have never missed a payment and will continue making payments. It appears as if I should not file a reaffirmation agreement. The only info GMAC provides me is as follows: if I do not reaffirm the debt, they will place an item that there is $0 owed and $0 paid on my credit report. If I continue to make payments and pay down the debt, they will eventually relase the title to my home when paid in full. In my estimation, based upon these facts, it appears as if should not reaffirm my mortgage. Can you comment in a way that does not constitute legal advice?
Most jurisdictions support the notion that if the debtor does nto sign a reaffirmation agreement the bank can foreclose even if you are current with the payments. i disagree with that opinion in New York, but that is the law. Under the old law (pre-10/2005) we normally would reject the reaffirmation agreement because all it did was bind the debtor to the note once again. However, the bank is correct in that in the absence of a reaffirmation agreement they will not report favorable credit information to the credit reporting agencies.
The Bankruptcy Code does not allow the so-called ride through (retain and pay) on personal property. Some states do, but many do not. However, the right to retain real estate remains. So long as the payments are current and the property is insured, you can stay. A few judges have misinterpreted bankruptcy law to require reaffirming mortgages. You need to check with a NC attorney to find out if NC is one of them (I do not believe so).
Regarding your credit report, it will show discharged in bankruptcy and $0 as the balance if you do not reaffirm. The personal liability goes away, but the lien remains. If you need to get information on the payoff, you may need to file a Qualified Written Request (or QWR) under the Real Estate Settlement Procedures Act (RESPA) to get it.
Reaffirmation is rarely, if ever, advised for mortgages, because it is not required.
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[This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]
Ellen Lorraine PattonChapter 7 Bankruptcy AttorneyLongwood, FL ·
In Florida it is the practice to NOT reaffirm on mortgages. Keep paying and the bank is not going to mess with a home that is "current" (down here they're past their eyeballs in houses that aren't to mess with people who are current). Stop paying and all they can do is foreclose. It's that simple.
Yes, they can stop reporting on your credit report, but so what? Keep track of it yourself and keep it at the ready in case you need it for future financing requests. There is a technique called Manual Underwriting that some lenders will use and you can find when/if the time comes for something like that again.
