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New Member
Marine1975
Posts: 4
Registered: ‎06-27-2013
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Chapter 7 and mortgage questions.

[ Edited ]
So I converted from a Chapter 13 to a Chapter 7 on May 15th and am due to discharge in July. To convert I had to note we intended to surrender our home. Truth is I would love to keep the home and have submitted a loan modification package as the house is somewhat upside down. I am current on payments and struggle to make them but as I said I have managed to stay current. My questions are these...

1. If modification gets denied and I stay current on payments and down the road say in 10 years I have stayed current and built up equity or am close to paying off the house can the bank just take it from me since I did not reaffirm?

2. After my credit recovers from the Chapter 7 in a few years and if I wanted to refinance with another lender could I do that since I did not reaffirm?

3. If I ever hit the lottery and wanted to put in a pool, again could I have my house taken from me even if I'm current on payments? I ask this because I would never want to put any time or money into upgrades if the property could just be taken out from under me even if I am current on payments. Just seems to me if the house turns around down the road and there ends up being a good amount of equity or it's close to being paid in full, what's stopping the bank from taking it from me even if I am current since I did not reaffirm? At that time they could sell it and make an easy profit.

Thanks for any insight!
Frequent Contributor
shols44
Posts: 398
Registered: ‎11-03-2012
0

Re: Chapter 7 and mortgage questions.


Marine1975 wrote:
So I converted from a Chapter 13 to a Chapter 7 on May 15th and am due to discharge in July. To convert I had to note we intended to surrender our home. Truth is I would love to keep the home and have submitted a loan modification package as the house is somewhat upside down. I am current on payments and struggle to make them but as I said I have managed to stay current. My questions are these...

1. If modification gets denied and I stay current on payments and down the road say in 10 years I have stayed current and built up equity or am close to paying off the house can the bank just take it from me since I did not reaffirm?

2. After my credit recovers from the Chapter 7 in a few years and if I wanted to refinance with another lender could I do that since I did not reaffirm?

3. If I ever hit the lottery and wanted to put in a pool, again could I have my house taken from me even if I'm current on payments? I ask this because I would never want to put any time or money into upgrades if the property could just be taken out from under me even if I am current on payments. Just seems to me if the house turns around down the road and there ends up being a good amount of equity or it's close to being paid in full, what's stopping the bank from taking it from me even if I am current since I did not reaffirm? At that time they could sell it and make an easy profit.

Thanks for any insight!

My advice to you is not to reaffirm. Include the mortgage in your BK and continue paying. The bank will let you stay as long as they continue to cash a check. The problem with re-affirming is if you can no longer afford the house in the future the bank will come after you and you would have lost the protection BK would have afforded you. 

 

If you include the mortgage in the BK and continue to pay, in a few years you should be able to qualify for a mortgage and buy the house from the lender. If you decide to walk away at any point in the future, for whatever reason you won't owe the bank a dime. This is the reason it makes sense not to reaffirm especially since you are underwater. 


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New Member
Marine1975
Posts: 4
Registered: ‎06-27-2013
0

Re: Chapter 7 and mortgage questions.

Thanks shols44!
Member
MartyFisher92100
Posts: 103
Registered: ‎06-29-2013
0

Re: Chapter 7 and mortgage questions.

Hello This is Marty I wanted to give you some info. 

 

Currently you filed the petiton for a chapter 7 which legally means you have 2 choices too either surrender or retain the home. I would have your local attorney amend the petition to retain. And have your attorney due a loan mod. either obama or in house depending on your mortgage. Please give me some info about the loan and terms and balance. I would do this immeditaley before a 341 meeting. Was this held already


Marine1975 wrote:
Thanks shols44!

 

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New Member
Marine1975
Posts: 4
Registered: ‎06-27-2013
0

Re: Chapter 7 and mortgage questions.

Had my meeting on May 15th and should discharge this month. My mortgage is a VA loan that just got sold from BofA to Nation Star. I owe 178k for 22 years. Attorney and bank tells me that as long as I keep my payments current there should be no issues??? My plan is to not reaffirm and refinance in about 3 years with another mortgage company when my credit score gets back up. Just wanted to make sure that even if I stay current on my payments that the bank could not take the house from me at some point along the way, be it 1 year or 21 years down the road.
Established Contributor
SoulMaster
Posts: 993
Registered: ‎11-08-2011
0

Re: Chapter 7 and mortgage questions.

In every single sense of the words: loan mods are better than refi's.

 

If you qualify for a mod, you should do that without waiting the 3 years.  Also, if you refi, you'll essentially be reaffirming.  If your house is underwater; never, ever do that.

 

Talk to a loan modification attorney (find a new one if your BK attorney can't do them).  The consult should be free, and they can give you an idea of what you can do about your house debt right now (without reaffirming).  You're VA so there might be something special re: the mod, but free consults are free.

 

-SM

I am not an attorney and none of what I write should be construed as legal advice. For legal advice please consult an attorney.

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