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Valued Member
Posts: 41
Registered: ‎12-07-2010
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So, apparently reaffirming debt is a bad thing?

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?


Starting Score: TU 500, EQ 577, Vantage EX 626
Current Score: TU 500, EQ 587, Vantage EX 626
Goal Score: 700


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Contributor
Posts: 90
Registered: ‎11-12-2010
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Re: So, apparently reaffirming debt is a bad thing?

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. 

Valued Contributor
Posts: 1,063
Registered: ‎05-26-2010
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Re: So, apparently reaffirming debt is a bad thing?

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.

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
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Senior Contributor
Posts: 3,626
Registered: ‎10-13-2009
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Re: So, apparently reaffirming debt is a bad thing?

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.

IAALBNYL
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