Filed ch7 3 weeks ago! Question about reaffirmations. Is it worth it when value is less then owed?

[ScoreBooster]

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@Anonymous wrote:

I've seen a lot of highly inaccurate and potentiall damaging advice about complex legal issues by some who are not lawyers, much less bankruptcy lawyers.

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Reaffirming a first mortgage may or may not be in your best interests, but, again, you need to look at your equity in the property and your desire to remain in the home.  It is an old wives tale that a mortgage holder cannot and will not foreclose on a non-reaffirmed obligation even though you are current on payments.    Not only is state law a factor, but there are a variety of other factors at play and it is not that uncommon for a mortgage holder to initiate foreclosure on properties that, although current, are not reaffirmed.  Talk to your mortgage lender, read carefully the terms of your existing mortgage contract and, most importantly, talk to your bankruptcy attorney and specifically ask about the acceleration clauses which are found in your mortgage contract.

I have personally had clients that did not reaffirm their mortgage and were foreclosed on even though they were current in payments.  Although it doesn't happen very often, comments that in 99.999% of the cases one runs no risk are not only false, but reckless.  You should rely on professional advice given by your own bankruptcy attorney rather than laypeople you find on Internet forums.

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See, the problem is that this is a public forum and not a meeting of attorneys. If we want to avoid these problems, we would have to close all public forums - considering that even "professional lawyers" come to totally different conclusions on an identical case. If they can't make up their mind, how are we supposed to?

Every case is different and I have to advise others based on my own experience. To me it makes more sense to tell people what is going to happen 9 out of 10 times rather than focusing on the 1 case that might be different. Nobody in a BK case should only rely on information from a public forum but when it comes to reaffirmation, in the majority of cases it's in the BANK'S best interest and not in the debtor's best interest to reaffirm - especially in today's market. For me, there's no doubt about that.

I simply don't want to advise 9 out of 10 people to sign an agreement that puts them into a financial grave on day one after their discharge for no reason just because a reaffirmation might be the right choice for 1% (if at all) of the members reading my posts.  How am I supposed to advise others they should sign an agreement that makes them liable again for potentially several $100Ks that might be unsecured? What's the purpose of their BK then if they don't get a discharge on that crucial debt? Before I would do that, I would honestly suggest a foreclose.

When it comes to totally unsecured HELOCs and 2nd mortgages, the question might also be: Is the judge going to allow a reaffirmation in the first place?

If a member asks me for MY personal advice (and may I remind you that this is what happened), I'm going to provide just that. The individual case is the member's attorney's job. And when I stated not to reaffirm, I CLEARLY indicated that this would be what I would do in such a situation.

[ScoreBooster]

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@Anonymous wrote:

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@ScoreBooster wrote:

An attorney advising a client to reaffirm a 100% underwater second mortgage or HELOC is a bad attorney - or maybe not because the client might be back with the same financial problems sooner than later.

You might be interested in this thread from bkforum.com, THE board for all questions and issues about BK. The thread I provided a link to was started by a user named "despritfreya". He IS a BK-attorney.

http://www.bkforum.com/showthread.php?62833-Why-reaffirming-a-mortgage-is-a-very-very-bad-idea.

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And this is precisely why people should consult an attorney and not reply one someone with virtually no legal knowledge or skills.

Being underwater is but one of several factors that come into play and, unfortunately, Google is not able to provide a link that takes all into consideration and throw out 100% foolproof advice.

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As I said, this advise IS from a BK-attorney.

There are good attorneys and there are bad attorneys. You get an answer from attorney A and atotally different answer from attorney B. Just like on google...

You don't want to tell us that there is such a thing as a "foolproof attorney", do you?

[Anonymous]

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@ScoreBooster wrote:

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@Anonymous wrote:

I've seen a lot of highly inaccurate and potentiall damaging advice about complex legal issues by some who are not lawyers, much less bankruptcy lawyers.

.....

Reaffirming a first mortgage may or may not be in your best interests, but, again, you need to look at your equity in the property and your desire to remain in the home.  It is an old wives tale that a mortgage holder cannot and will not foreclose on a non-reaffirmed obligation even though you are current on payments.    Not only is state law a factor, but there are a variety of other factors at play and it is not that uncommon for a mortgage holder to initiate foreclosure on properties that, although current, are not reaffirmed.  Talk to your mortgage lender, read carefully the terms of your existing mortgage contract and, most importantly, talk to your bankruptcy attorney and specifically ask about the acceleration clauses which are found in your mortgage contract.

I have personally had clients that did not reaffirm their mortgage and were foreclosed on even though they were current in payments.  Although it doesn't happen very often, comments that in 99.999% of the cases one runs no risk are not only false, but reckless.  You should rely on professional advice given by your own bankruptcy attorney rather than laypeople you find on Internet forums.

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See, the problem is that this is a public forum and not a meeting of attorneys. If we want to avoid these problems, we would have to close all public forums - considering that even "professional lawyers" come to totally different conclusions on an identical case. If they can't make up their mind, how are we supposed to?

Every case is different and I have to advise others based on my own experience. To me it makes more sense to tell people what is going to happen 9 out of 10 times rather than focusing on the 1 case that might be different. Nobody in a BK case should only rely on information from a public forum but when it comes to reaffirmation, in the majority of cases it's in the BANK'S best interest and not in the debtor's best interest to reaffirm - especially in today's market. For me, there's no doubt about that.

I simply don't want to advise 9 out of 10 people to sign an agreement that puts them into a financial grave on day one after their discharge for no reason just because a reaffirmation might be the right choice for 1% (if at all) of the members reading my posts.  How am I supposed to advise others they should sign an agreement that makes them liable again for potentially several $100Ks that might be unsecured? What's the purpose of their BK then if they don't get a discharge on that crucial debt? Before I would do that, I would honestly suggest a foreclose.

When it comes to totally unsecured HELOCs and 2nd mortgages, the question might also be: Is the judge going to allow a reaffirmation in the first place?

If a member asks me for MY personal advice (and may I remind you that this is what happened), I'm going to provide just that. The individual case is the member's attorney's job. And when I stated not to reaffirm, I CLEARLY indicated that this would be what I would do in such a situation.

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I'm simply pointing out that you are confused about the percentages.  Nine of ten is false and unless you have personally represented a reasonable quantity of bankruptcy cases -- which, if you had, would have been a felony -- you have nothing but an uneduated guess.

The simple fact is that there are a number of factors to consider in a potential reaffirmation and not only the issue of equity.

[ScoreBooster]

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@Anonymous wrote:

I'm simply pointing out that you are confused about the percentages.  Nine of ten is false and unless you have personally represented a reasonable quantity of bankruptcy cases -- which, if you had, would have been a felony -- you have nothing but an uneduated guess.

The simple fact is that there are a number of factors to consider in a potential reaffirmation and not only the issue of equity.

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There it is again.."confused"...oh boy..

9 out of 10 people should not sign a reaffirmation when the mortgage is unsecured and if they stay current, they won't lose their home. If you say that's inaccurate it's your job to back up your claim with facts. Or as a start, be so kind and enlighten us - based on YOUR experience, what the correct number is.

If you have other experiences and the % among your clients (if you are an attorney) who lost their home due to not reaffirming is higher, I would be very concerned  IF I would be your client. You previously stated that you already experienced "many cases" where homeowners lost their home due to not reaffirming although they were current. How could that happen? Did you fail to read their mortgage-contract?

The comment about reaffirming a stripped mortgage or HELOC raised my eyebrows, too. And since the OP is in or planning on a BK CH7, there is no "stripping" in the first place. I thought a professional would know that...or it is just proof that the existence of a "foolproof" attorney is just wishful thinking..

[Anonymous]

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@ScoreBooster wrote:

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@Anonymous wrote:

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@ScoreBooster wrote:

An attorney advising a client to reaffirm a 100% underwater second mortgage or HELOC is a bad attorney - or maybe not because the client might be back with the same financial problems sooner than later.

You might be interested in this thread from bkforum.com, THE board for all questions and issues about BK. The thread I provided a link to was started by a user named "despritfreya". He IS a BK-attorney.

http://www.bkforum.com/showthread.php?62833-Why-reaffirming-a-mortgage-is-a-very-very-bad-idea.

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And this is precisely why people should consult an attorney and not reply one someone with virtually no legal knowledge or skills.

Being underwater is but one of several factors that come into play and, unfortunately, Google is not able to provide a link that takes all into consideration and throw out 100% foolproof advice.

---

As I said, this advise IS from a BK-attorney.

There are good attorneys and there are bad attorneys. You get an answer from attorney A and atotally different answer from attorney B. Just like on google...

You don't want to tell us that there is such a thing as a "foolproof attorney", do you?

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I think you failed to understand, and often misconstrue, some of the comments that followed in the thread you linked to.

You mentioned the term rights but the poster inquiring about that in the thread you mentioned used the wrong word and thus received an incomplete answer.  To be fair, their are rights in the mortgage contract that do protect the debtor.  For example, if you are current on a reaffirmed debt you have the "right" not be foreclosed upon absent certain acceleration clauses.  Still, a better question would be what benefits do I obtain if I reaffirm.

And there can be benefits.

There is the benefit of not being foreclosed on.

There is the benefit of no arbitrary mortgage payment increases.

There is the benefit of being able to refinance / seek loan modifications.

There is the benefit of almost guaranteed recovery should property markets move in your favor.

Now, the question is to the advantages outweigh the very real disadvantages.  The point is that whether or not you chose to reaffirm your mortgage obligation should only be made after careful consideration of the totality of your circumstances, the legalities involved, potential advantages and disadvantages and a thorough discussion with one's own bankruptcy lawyer about what such a decision means, both for the near term and the long term.  And not on an uneducated statement that it is almost never a good idea to reaffirm.

[Anonymous]

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@ScoreBooster wrote:

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@Anonymous wrote:

I'm simply pointing out that you are confused about the percentages.  Nine of ten is false and unless you have personally represented a reasonable quantity of bankruptcy cases -- which, if you had, would have been a felony -- you have nothing but an uneduated guess.

The simple fact is that there are a number of factors to consider in a potential reaffirmation and not only the issue of equity.

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There it is again.."confused"...oh boy..

9 out of 10 people should not sign a reaffirmation when the mortgage is unsecured and if they stay current, they won't lose their home. If you say that's inaccurate it's your job to back up your claim with facts. Or as a start, be so kind and enlighten us - based on YOUR experience, what the correct number is.

If you have other experiences and the % among your clients (if you are an attorney) who lost their home due to not reaffirming is higher, I would be very concerned  IF I would be your client. You previously stated that you already experienced "many cases" where homeowners lost their home due to not reaffirming although they were current. How could that happen? Did you fail to read their mortgage-contract?

The comment about reaffirming a stripped mortgage or HELOC raised my eyebrows, too. And since the OP is in or planning on a BK CH7, there is no "stripping" in the first place. I thought a professional would know that...or it is just proof that the existence of a "foolproof" attorney is just wishful thinking..

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Some lawyers use the term "stripping" even in Chapter 7 to indicate turning a secured creditor into an unsecured creditor.  Of course, you are not expected to know that.

Again with the 9 out of 10.  If you have some how managed to come by those numbers via independent research please share that with us?  Or is it because you practice law and can tell us than in your bulging case files you found 9 out of 10 of your clients had no issues when not reaffirming an unsecured mortgage? 

You really are confused assuming that just because one has had clients losing their home to foreclosure even though current in payments it somehow implies that one was their bankruptcy attorney.  But at this stage of the game, nothing would be a surprise.

[ScoreBooster]

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@Anonymous wrote:

Now, the question is to the advantages outweigh the very real disadvantages.  The point is that whether or not you chose to reaffirm your mortgage obligation should only be made after careful consideration of the totality of your circumstances, the legalities involved, potential advantages and disadvantages and a thorough discussion with one's own bankruptcy lawyer about what such a decision means, both for the near term and the long term.  And not on an uneducated statement that it is almost never a good idea to reaffirm.

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The point is that we have to take into account that there is a limitation to what can be determined on a public forum.

To be on the safe side, every question should only get one answer: "Ask your attorney."

However, some people want to hear about real life experiences. One thing even the best attorney can't do is predict the future. And that is one problem with reaffirming upside down mortgages.

Most people filing for BK CH7 probably don't live in $1 Million houses with two little $50K-mortgages. If they would - hey, I would support a reaffirmation right away.

You are focusing on what might happen legally - I'm focusing on what could happen to the individual. Sometimes, walking away is even wiser than signing a reaffirmation. The worst thing would be reaffirming in a recourse-State - like FL - and not being able to hold on to the house. You certainly know how many people are upside down and if they reaffirmed in a recourse state and can't pay at some point in time, they are financially dead. So even if they would be so unlucky to lose their home by not reaffirming, they might still be better off. In the past, the described case might have been a rare exemption - today, it happens over and over again.

In the past, the majority of people had equity in their homes and signing a reaffirmation was more or less a formality. If they wanted to keep their home, they did, if they wanted to walk away, they didn't. After the real estate desaster, times have changed and the previous formality can destroy you financially.

I'm not making this up. The majority of BK-filers with no equity should only reaffirm if they have to and even then, only to that degree to which the mortgage they reaffirm is mostly covered by the value of their home. I'd rather see a homeowner walking away than tying him/herself to a financial burden that could ruin their life. I would feel very bad by suggesting a reaffirmation to a CH7 filer on a totally unsecured seconnd mortgage. A reaffirmation also drastically reduces your chances on a settlement on an unsecured HELOC or 2nd mortgage - which is VERY common these days if you haven't reaffirmed.

After all, a BK should give you a fresh start.

[ScoreBooster]

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@Anonymous wrote:

Some lawyers use the term "stripping" even in Chapter 7 to indicate turning a secured creditor into an unsecured creditor.  Of course, you are not expected to know that.

Again with the 9 out of 10.  If you have some how managed to come by those numbers via independent research please share that with us?  Or is it because you practice law and can tell us than in your bulging case files you found 9 out of 10 of your clients had no issues when not reaffirming an unsecured mortgage? 

You really are confused assuming that just because one has had clients losing their home to foreclosure even though current in payments it somehow implies that one was their bankruptcy attorney.  But at this stage of the game, nothing would be a surprise.

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Well, you used the term "stripping" in regards to a lien and this is not an option as it is in CH 13. If you think that it helps the OP to use a term that isn't even an option in the OP's case....I'll leave it to other's to judge the quality of that comment.

Why should I provide a source for my claim since you aren't even able to provide us with a suggestion - not a source - of what the correct number is? But I see, your not a BK-attorney, either, so you obviously can't. I consider my quote right until it's proven wrong. After all, you are claiming to be the professional and if you can tell what's wrong, you should be able to tell us what's right.

Am I right that there is also much "assumption" on your side? After all, you are talking about BK-cases you obviously didn't handle in the first place. Sounds like a lot of "he says, she says.."...

[ScoreBooster]

After all, I think we can agree on disagreeing.

Another reason why a forum exists in the first place.  Have a good night!

PS. I'm now going to listen to some music, my favorite song from Genesis, "Land Of Confusion". 

[MyFico_704]

Hello... Original Poster here,

Wow.. this is great! I'm learning so much from these "discussions" and I appreciate all of they inputs, personal experiences and yes, legal advice!

Filing was 2 weeks ago but my attorney says I have before discharge to decide whether or not to reaffirm.

fyi..

1st - obviously secured.

2nd - secured

3rd - (HEL) - secured to property as well. 

ALL ARE WITH SAME LENDER IN NC.

From what I'm reading it would seem it's in my best interest NOT TO REAFFIRM but continue to pay.. and STOP paying on 2nd/3rd if my financial situation does not improve in the coming years.  MY BIGGEST CONCERN is that because they are SAME LENDER they can just "wrap" all 3 into 1... then I'd probably be screwed!  Then again, Mecklenburg County NC just came out with reassessment and the property is only 220k, while all mortgages are almost 280k.

I'm tempted NOT to reaffirm ANY!  But at minimum I'm thinking just REAFFIRM the 1st.

What should I do?