12-08-2010 05:56 PM
I emailed my BK attorney about reaffirming my mortgage so that it can report positive on my credit account.
She said to stay away from it, have the bank contact her directly if they continue to contact me about it, and that it requires a hearing before a judge and is usually never approved... hmmm
She also said there are other ways to rebuild credit without reaffirming a large debt that may cause problems in the future.
What do y'all think?
12-08-2010 08:33 PM
I'm in the process of filing and have talked to 2 BK attorneys. I plan to reaffirm my home. My attorney said there would be no reason the reaffirming wouldn't be approved but that I did not have to do that to keep my home and that I could instead just keep paying on it. He said reaffirming a debt is like you never filed BK with that debt and you have all the responsibilities pre BK with it. I told him I wanted to reaffirm my home because I need a place to live and don't want the risk of my mortgage company taking it. He said the mortgage company seldom wants the house unless you're behind on payments, and I'm not. He said if I need the reassurance and peace of mind I can reaffirm my home, and I plan to do that. Cars are reaffirmed all the time, he said.
12-09-2010 04:15 AM
My lawyer was definitely opposed to reaffirming my car. His focus was that you are giving the lender "something for nothing", that if they won't reduce the principal or lower the interest rate you should just "drive through". I imagine the same would apply to a home (I didn't own when I filed). I think the other thing everyone is concerned about is that you don't get back to the problems that led you to file, or give up parts of your "fresh start" unnecessarily.
When you don't reaffirm, you have eliminated the legal obligation to pay, and the lender retains their security interest in the collateral. Many car lenders (e.g. Ford aMotor Credit) specifically make the act of filing BK an event of default, and repossess cars that are current once the temporary stay is lifted. Some jurisdictions allow this, others don't.
For your home, The fact that your attorney is willing to go ahead with reaffirmation if that's your desire is a positive. I don't see why you couldn't ask the lender to include language requiring accurate post-BK credit reporting in their reaffirmation agreement. If they insist on using a standard form, ask for a side letter describing how they will report the reaffirmed loan.
12-12-2010 09:13 PM
Many times issues of reaffirming auto loans or mortgages are anything but simple. A lot depends on your state's exemptions / homestead possibilities, the value of the collateral, equity and the possibility of using "lien stripping" to effectively eliminate any security interest the lender may have.
You might seek a second opinion from a local BK attorney.
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