If you receive a discharge before you’ve decided on reaffirming, you must file a motion with the court, seeking permission to reopen your case. If the court grants your request, you then can file the reaffirmation agreement and seek the judge’s approval. If You Don’t Reaffirm
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What Can You Do If You Did Not Reaffirm Your Mortgage? Can You Just Reopen Your Bankruptcy And Reaffirm The Mortgage? You may be reading this because your mortgage company has told you that they cannot (or will not) report your mortgage payment history on your credit report because you did not reaffirm your mortgage in your Chapter 7 case.
If you receive a discharge before you’ve decided on reaffirming, you must file a motion with the court, seeking permission to reopen your case. If the court grants your request, you then can file the reaffirmation agreement and seek the judge’s approval.
They essentially revive the mortgage as if the person had never filed for bankruptcy. Mortgage companies argue that reaffirming a mortgage is the best way to ensure that your payments are reflected on your credit report, though there’s nothing that says you have to reaffirm a loan for them to report your payments.
Maryland has no published opinions on this issue, although at least one Maryland court vacated a debtor’s discharge in order to allow them to execute reaffirmations. A Maryland bankruptcy judge will eventually issue a written opinion, either allowing or disallowing the practice.
Can you file a reaffirmation agreement after discharge? Once a discharge order has been entered in your bankruptcy case, you can no longer reaffirm any of the debts that were included in the discharge agreement. The same goes for if your case has been closed by the court.
Secured debts like mortgages are still debts and therefore can be discharged through bankruptcy. But, the only way to keep the item securing the debt is to continue to pay for them. Reaffirmation agreements for mortgages are possible, but not necessary. They are, however, always subject to court approval.
The agreement is voluntary for you and for the creditor—the creditor may refuse to offer a reaffirmation. All parties need to move quickly to get an agreement reviewed, signed, and filed.
Reaffirming the debt gives it new life -- you're once again legally obligated to pay it. If you don't make the mortgage payments, the lender can foreclose and your bankruptcy won't stop this from happening.
Reaffirming a mortgage debt requires a comprehensive multi-page reaffirmation agreement that must be filed with the court. The reaffirmation agreement also requires the debtor's bankruptcy attorney to indicate that he or she has read the agreement and that it does not impose any undue hardship on the client.
In Chapter 7 bankruptcy cases filed in California, the lender can repossess your vehicle if you refuse to sign a Reaffirmation Agreement. However, even if you do sign one, a reaffirmation agreement must be filed in the Chapter 7 bankruptcy case, and it must be approved by the Bankruptcy Court.
The truth is that you do NOT have to reaffirm your loan to refinance. There is no law that says anything like that. The hurdle is not a law, it is just the bank's policy. They may have chosen not to offer to refinance to people who chose not to reaffirm.
Either way - if the reaffirmation agreement is not approved, your personal liability is discharged. And - just like when the court denies approval of the reaffirmation - most lenders will simply keep everything the same, as long as you make timely payments and keep the vehicle insured.
Reaffirming Helps Rebuild Your Credit So timely payments won't help you establish a good credit history after bankruptcy. If you reaffirm the loan, your lender will continue reporting payments.
Reaffirming your mortgage means that you file paperwork that states that you affirm this debt regardless of your bankruptcy discharge. That protects your lender from losing out on the money they have invested in the property, and it also allows you to retain your ownership in the home and your accumulated equity.
Reaffirmation is the process wherein you agree to remain responsible for a debt so that you can keep the property securing the debt (collateral). You and the lender enter into a new contract—usually on the same terms—and submit it to the bankruptcy court.
A process is in place within the U.S. Bankruptcy Code that permits you to modify the terms of your mortgage in a Chapter 13 case.Contact the mortgage lender and advise her that you desire to enter into a reaffirmation agreement. ... Notify the bankruptcy trustee of your intent to reaffirm the mortgage loan.More items...
Reaffirmation agreements confirm a person’s responsibility for paying that burden, even after discharge of other debts. Filers who default will still owe the “deficiency balance” left on the mortgage note. A deficiency judgment allows banks to sue filers for the outstanding balance after a foreclosure sale.
Once forgiven, you are “absolved” and no longer personally responsible for paying the mortgage. Reaffirmation agreements, on the other hand, keep filers personally liable for making mortgage payments, even after a discharge. They essentially revive the mortgage as if the person had never filed for bankruptcy.
Mortgage lenders are “secured” creditors because they can reclaim your property if you default on the loan. On the other hand, unsecured debt like credit cards and student loans are not backed by tangible property.
In some states, reaffirming a mortgage is routine and judges gladly approve the agreements. In others, judges can dress down bankruptcy lawyers for even floating the idea. New Jersey and New York are examples. In such states, no attorney would prepare much less file a reaffirmation agreement destined to be rejected by the court.
Judges ultimately decide whether to approve reaffirmation agreements on real property. Their stance on reaffirmation of mortgages, in turn, depends on the state. Bankruptcy courts across the country are split on the issue. In some states, reaffirming a mortgage is routine and judges gladly approve the agreements.
The reaffirmation of mortgage debts is possible in Chapter 7 bankruptcy but it's not necessary. Learn what a reaffirmation agreement is how it affects your home mortgage. Written by Attorney Serena Siew.
If you’re looking to refinance with a different bank, you can ask your mortgage lender for a payment history, but the new bank you’re working with may not give it as much weight as they would a credit bureau’s history of payments.
In addition, a fair number of bankruptcy judges won’t sign a reaffirmation agreement because it’s not necessary in order for you to keep the property. If you’re hellbent on reaffirming the mortgage, be prepared to face some tough questions in your quest to convince the judge that it’s a good idea to do so.
Reaffirmation is a legal term, but it loosely means a new promise to repay a debt after bankruptcy that otherwise would be wiped out. You and the lender sign an agreement that’s approved by the bankruptcy judge, and it becomes binding on you after your case is completed.
It’s filed as a public record so that you can’t sell without satisfying the Promissory Note. More to the point, it is the Mortgage that the lender will use to foreclose on the property in the event that you fail to live up to your obligations under the Promissory Note.
When you file for Chapter 7 bankruptcy, your personal responsibility for paying your mortgage will be wiped out. That doesn’t mean your mortgage disappears, however.
The lien stays against your property, and the lender will use it if you don’t make your payments. In that way, you’re still sort of liable on the Promis sory Note. If you don’t care about keeping the property, don’t make payments. But if you want to keep it, you need to keep sending your money.
What it does mean is that your can’t be held responsible for any shortfall if you fall behind and the lender sells the property at a loss. In California, you can’t be held liable for the shortfall on a first mortgage anyway. But in New York as well as elsewhere, without a bankruptcy discharge the lender could sue you for the deficiency.
A reaffirmation agreement must be signed by both parties and approved by the bankruptcy court before the discharge is entered. Once the discharge is entered, the bankruptcy judge doesn’t have the authority to sign the agreement. If you’re going to do it, best to get the process started as soon as the case is filed.
To be effective, Reaffirmation Agreements must be filed with the bankruptcy court before entry of the Discharge Order (which occurs 60 days after the initial 341 meeting). In much of the country, a debtor is personally obligated on the balance due on a mortgage debt after foreclosure.
Instead, your mortgage company simply quits reporting your post- bankruptcy payment history to them. The mortgage creditor quits reporting because courts have punished mortgage creditors for reporting payments missed after filing under the theory that doing so is a prohibited collection effort.
In this scenario, a debtor would send a brief statement to the credit reporting agency disputing the accuracy of the reported payment history, indicate they are current on payments, and assert that the only reason the “on time” payment history is not shown is because the mortgage was not reaffirmed in the Chapter 7.
After bankruptcy, many clients later seek to incur debt such as a new home loan or, maybe, a refinance of the existing mortgage debt discharged in the Chapter 7. Most mortgage lenders obtain a mortgage payment history from a credit report.
Some lenders want to see the payment history on your credit report because that is how choose to calculate whether you qualify. That is their prerogative. However, not all lenders are this rigid. Sometimes you just have to be persistent and check with multiple lenders including local credit unions.
When you finance the purchase of a home, you normally sign a (1) Promissory Note that states how much your borrowed and the terms of repayment, and (2) Deed of Trust that indicates the creditor has a lien on the home and that they can foreclose (take the home) if you fall into default on payments (or lack of insurance, etc.).
Obtaining a new loan can be a problem if your mortgage creditor is not reporting post-bankruptcy payment activity to the credit reporting agencies. A debtor might try to resolve this by obtaining a payment history directly from their mortgage creditor and providing this history to the prospective lender.
If you receive a discharge before you’ve decided on reaffirming, you must file a motion with the court, seeking permission to reopen your case. If the court grants your request, you then can file the reaffirmation agreement and seek the judge’s approval.
If you don’t reaffirm, the account no longer legally exists so there’s nothing to report. This can make it more difficult to begin repairing your credit post-bankruptcy. Your lender probably won’t bother sending you monthly statements if you don’t reaffirm the mortgage.
How Reaffirmation Works. Your bankruptcy discharge extinguishes the promissory note you signed at the time you took out your mortgage. You no longer owe it unless you reaffirm the loan, and you can’t keep the home unless you keep paying on the note even though you're no longer legally obligated to do so. Reaffirming the debt gives it new life -- ...
The bankruptcy court only has the power to approve your reaffirmation agreement if you have an open case and haven’t yet received your discharge. You can submit your signed agreement to the court during the proceedings. If you have an attorney and he signs it as well, you may be able to avoid a court hearing.
You generally must default on the loan before the lender will take such an action, but if you don’t reaffirm, you’ll live in a sort of legal limbo. Your lender might take your home even if you do make the payments because you're no longer obligated under the terms of the promissory note.
Otherwise, be prepared to appear before the judge and answer some questions. According to the law firm of Shaev and Fleischman, some judges won’t reaffirm a significant debt like a mortgage when state law prevents the lender from foreclosing as long as you keep up with your payments.
It’s not likely your mortgage lender will foreclose if you refuse to reaffirm -- at least not on that basis alone -- but there remains an outside chance exists that you could lose your home without one.
In order to get your mortgage payments added to your credit report, you must file a dispute with each bureau. Send to the complaint department of each credit bureau – address info can be found on their websites – and ask them to correct the information on your mortgage data. Circle the mortgage entry (s) on the credit report and state in the letter that are disputing the information about the circled item. Attach a copy of the credit report – hang on to the original.
The credit bureau has 30 days to verify your assertions with the mortgage company. If the mortgage company doesn’t respond (and they may not if their payment history aligns with your assertions), the credit bureau has to take your information and use it to correct your credit report. Alternately, the mortgage company can voluntarily report the payments in response to your dispute. Either way, your report should be corrected.
If the fees are reasonable, you may want to pay for additional reports, so you have one for each six months of the year or one per quarter. This is necessary to substantiate your self-reporting, and the mortgage lender cannot withhold this.
This is the basis for your dispute. A dispute tells the credit bureau that you disagree with an entry on your credit file and are requesting that they correct it.
But you can – and should – self-report to improve your credit rating, demonstrate your current on your loan, and protect yourself from predatory actions by lenders such as unlawful foreclosure. The mortgage lender is not breaking any laws by not reporting payments on an un-reaffirmed mortgage.
Mortgages can survive Chapter 7 bankruptcy. Image Source: Flickr User American Advisors Group. If you are current on your mortgage payments and file Chapter 7 bankruptcy, you may have been advised by your attorney not to reaffirm your mortgage during the process – or your lender may have refused to reaffirm.