@ezdriver wrote:
@Anonymous wrote:
My mother is considering filing chapter 7 bankruptcy in Michigan. She went today for a consult but came away with some concerns. The lawyer told her that she has 2 options. She could either sign a reaffirmation document or include the home in bankruptcy and "Voluntarily pay". Now she wants to keep her home for sure, she does not want to let it go. He said that although 99% of banks will accept Voluntary payments, there is a chance that they will decline.
Her mortgage is with Wells Fargo, and she is so concerned that she will ultimately lose her home. She is current and will be able to make the payments, but the "no gaurantee" that she can keep the home is really weighing on her. There really is no problems with having equity to cause the trustee to take the home either. I dont know anything about this process, and have no advice to give her.
I am hoping someone on here, can give some advice. She is so concerned about losing the home. I did read that even if making voluntary payments, that the mortgage holder can just decide to foreclose to remove it off their books at any time randomly. Is she going to be making payments then a few years later, all of a sudden they decide to take it? Hoping for some help and advice. Thanks!
Yes, the mortgage holder can take possession of the property anytime it wishes to do so ... unless the mortgage is reaffirmed. If your mother wants to keep the house, then she has to reaffirm the mortgage.
No, not really. I didn't reaffirm in my Ch7 discharged Jan 31 2011 and my bank (BMO Harris Bank) has been happily accepting my payments 4/12 years since. They also happily accepted my payments during BK, I was never late prior to filingt, during BK, and post BK. The mortgage holder can only foreclosee if the borrower is in default. Default can happend one of two ways: 1) More than 30 days late on payments, or 2) The mortgage puts a clause in the Promissary Note specifying that default can occur when a specified event other than 30 days late happens, such as stating that filing BK automatically puts the mortgage in default. Making a mortgage automatically in default if the borrower files BK is very rare, it is is more commonly used by credit unions for car loans - must CUs require you to reaffirm a car loan or they will repo, reagrdless of payments being current.
UMrk- The primary concern in reaffirming/not reaffirming a mortgage is liability. If not reaffirmed then the debt is discharged and all continued payments do is prevent the lender from foreclosing if payments are not made on time. (Well, on the bank's books the payments continue to lower the balance by the amount of principal in the payments, and if your mother ever refinaced or sells the pay-off balance will reflect the payments made after BK) Should your mother ever run into problems in the future and the mortgage lender foreclosed, that's the end of the story, thye can't do naything else. If the mortgage is reaffirmed then you mother is liabile for the full remaining balance, if ever foreclosed and they sell the house for less than the pay-off balance then they can get a judgement and come after any of your mother's assets for the remaining amount due.
I suggest you & your mother research two things:
1- Look through the mortgage documents and make sure there's no clause in there about an automatic defualt if your mother files BK. I doubt it, several members here have posted about not reaffirming a mortgage with Wells Fargo and continue to pay after BK with no problem.
2- Check the remaining balance of the mortgage on a current statement and then research what the house is worth on the market. If you/she has a friend who is a realtor they may help you, or check Zillow.com for a ballpark figure. If she has plenty of equity (I would say if mortgage balance is at least less than 80% of home value) then she'd be reasonably safe to reaffirm if that would make her feel more secure.
Good luck!
