You should thank your attorney for not filing a reaffirmation agreement. The goal of a Chapter 7 bankruptcy is to discharge debt and give debtors a fresh start. Reaffirmations conceptually defeat these goals and I have sat in open court and watched bankruptcy courts deny reaffirmations.
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Jun 21, 2013 ¡ Federal law requires that any reaffirmation be submitted before the discharge is entered. Once the discharge papers are issued, a reaffirmation is no longer possible. If the loan is a mortgage, it is unlikely that the bankruptcy court would have approved a reaffirmation for you anyway, so your attorney may not be to blame.
Can You Reaffirm If the Attorney Doesn't Sign? If this is the case, you can still file the agreement without his or her signature, along with your explanation as to how you believe you can afford it despite the budget deficit. The court will then schedule it for a hearing.
The caller appeared to be upset to learn that his attorney didnât file a reaffirmation on his car loan. If the reaffirmation isnât filed, the car might be picked up even if the debt isnât in default but in this case the car lender didnât do this. The lender allowed the borrower to continue paying.
Oct 03, 2011 ¡ You should thank your attorney for not filing a reaffirmation agreement. The goal of a Chapter 7 bankruptcy is to discharge debt and give debtors a fresh start. Reaffirmations conceptually defeat these goals and I have sat in open court and âŚ
When debt is discharged in bankruptcy, the bankruptcy petitioner is no longer personally responsible for that debt. Therefore, if a homeowner files bankruptcy, does not reaffirm the debt, and receives the discharge, he or she is no longer liable for the outstanding balance and the mortgage.Jan 7, 2020
A reaffirmation agreement is a new contract between you and the creditor where you agree to pay a debt voluntarily that would have been discharged in your bankruptcy case. When you reaffirm a debt, you agree to be personally liable for paying it back.
If you decide to reaffirm a debt, you must do so before the discharge is entered. You must sign a written reaffirmation agreement and file it with the court. The Bankruptcy Code requires that reaffirmation agreements contain an extensive set of disclosures.Apr 7, 2021
Reaffirming a debt informs the lender that you intend to continue to pay the loan. Generally, the lender will continue to report the loan and all payments made on that loan to the credit reporting agencies, which may help improve your credit score after bankruptcy, provided timely payments are made on the loan.Dec 15, 2018
If the Court denies the reaffirmation agreement, you are in technical default again. This is part of the tradeâoff between Chapters 7 and 13. In exchange for a quick, efficient, inexpensive discharge of your debts, you give up control over the actions of creditors.Jun 9, 2021
Advantages to Reaffirmation of Debt Reaffirming a debt allows you to keep the property securing the debt, which can be a real advantage in some cases. It also allows you to avoid having to come up with a lump-sum payment to keep the property.
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. You'd also still be liable for any deficiency balance after the property's sale.
If you don't sign a reaffirmation agreement, the lender can repossess your car after your case closes and the automatic stay lifts. Some car lenders are known to repossess the car immediately, even if you are current on payments.
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.
Reaffirmation is an agreement by a debtor, to a lender, to repay some or all of their debt. Debtors make reaffirmation agreements purely voluntarily. When a borrower reaffirms a debt, this is noted by credit reporting agencies, which then register that the person will make regular on-time payments.
Reaffirmation agreements are strictly voluntary. A debtor is not required to reaffirm any of his or her debts. If a debtor signs a reaffirmation agreement, the debtor agrees to pay a debt that otherwise might be discharged in his or her bankruptcy case.
Reaffirm the Debt When you reaffirm a debt, you give up the benefit of your discharge and make yourself personally liable on the obligation again. As a result, reaffirming debts isn't usually advised unless you need the particular item; however, it might help protect your cosigners and guarantors from your creditors.
If the reaffirmation isnât filed, the car might be picked up even if the debt isnât in default but in this case the car lender didnât do this . The lender allowed the borrower to continue paying. The message appeared to be from someone who had fallen behind on his car payments 2 years after filing for bankruptcy.
Many courts have ruled that if a car hasnât been reaffirmed, then the creditor has the right to repossess and sell the car , but if a lender allows a debtor to keep and pay for the car, then the debtor is able to have their car without the risk if something happens down the road, pun intended.
The message appeared to be from someone who had fallen behind on his car payments 2 years after filing for bankruptcy. This particular person may have been helped by the fact that the debt wasnât reaffirmed since reaffirmed or not, a car can be repossessed if the loan payments fall behind.
Well I am confused by your updated comment. If the reaffirmation was submitted to the court, the creditor would have received a copy of the reaffirmation by email. There also is no need to reopen the case to notify the creditor. The bankruptcy files are always open to obtain copies.
You should thank your attorney for not filing a reaffirmation agreement. The goal of a Chapter 7 bankruptcy is to discharge debt and give debtors a fresh start. Reaffirmations conceptually defeat these goals and I have sat in open court and watched bankruptcy courts deny reaffirmations...
I believe it would be at best be irresponsible for an attorney to submit a reaffirmation for you at this point and possibly worse even malpractice. Bankruptcy is not about your credit. It is about the elimination of your debt.
First, you are required by law to list all creditors. If you truly did not include your home mortgage, the home mortgage would not have received notice of your bankruptcy. You would be hard pressed to say it was the mortgage company's fault when they did not receive notice. Nevertheless, they seem to have notice now. When you file a bankruptcy, a Statement of Intention is filed which lets secured creditors know whether you are interested in reaffirming a debt. But since you did not list the debt, then they would not have solicited anything. But typically creditors send reaffirmation agreements for Debtors to review and sign. The filing of the bankruptcy provides the notice of the intent to reaffirm (or not) and then the creditor will send the reaffirmation agreement. Your liability regarding the debt is discharged (except for some limited circumstances that do not seem to apply to your facts). But if you want to keep the home, payments will need to continue to be made as agreed upon in the contract. Liability still exists for your mother and if you do not pay, she could be on the hook for any deficiency and will certainly be negatively affected regarding her credit.
A mortgage is secured by the property. If you do not pay they can take through foreclosure. The bankruptcy discharged the debt as to you, your co-borrower remains 100% responsible for payment of loan. How will a foreclosure effect the co-borrower depends on more facts not disclosed in the question. Report Abuse.
Normally there is no reason to reaffirm mortgage debt as they cannot file a foreclosure for failure to reaffirm there debt. In California debt there is normally no personal liability on debt incurred to purchase a home. The Bankruptcy discharges does not discharge or remove the secured deed of trust on the home. If the debt is for non-purchase money, such as an equity line of credit on the home, the Bankruptcy discharge does discharge any personal liability.
Most bankruptcy judges will not approve of a reaffirmation of a real estate loan because it is not in the best interests of the borrower. And it is the lender's responsibility to offer a reaffirmation, but the lender has no obligation to offer you a reaffirmation, and many don?t. Stop taking legal advice from your mortgage company, because I guarantee you the person who told you about the law did not have a license to practice law, and maybe has no more than a high school diploma. The people who work for mortgage companies have only the interest of the mortgage company at heart and have no regard for the truth.
The process of reaffirming a debt is exactly that: a process. It starts with letting your creditor and the court know that you plan on reaffirming a certain debt in the Statement of Intentions ( Official Form 108) you file with your bankruptcy forms. Letâs take a look at what happens next.
The completed reaffirmation agreement needs to be filed within 60 days after the first date set for the meeting of creditors. The Cover Sheet for Reaffirmation Agreement ( Official Form 427) needs to be attached to the signed reaffirmation agreement.
The reaffirmation hearing. Alternatives to reaffirming your car loan. Conclusion. People who file bankruptcy are often concerned about what's going to happen to their car . Signing a reaffirmation agreement is one option that lets you keep your car and continue making the payments, but it's not the only option and might not be ...
At the end of a successful Chapter 7 bankruptcy case the filer receives a bankruptcy discharge, which erases their personal liability to pay back certain debts. Although the filer will no longer be personally liable to pay back a secured debt, the loan is still connected to the property.
If you reaffirm your car loan and later default on it, you could end up back in debt that you can't afford to pay. For this reason, it's important to carefully consider if reaffirmation is right for you.
The most common secured debts are mortgages, which are backed by real estate and car loans, which are secured by the vehicle. The creditor of a secured debt â known as a secured creditor â has the right to repossess the loan's collateral or force a sale if the borrower doesn't make the payments.
People who file bankruptcy are often concerned about what's going to happen to their car. Signing a reaffirmation agreement is one option that lets you keep your car and continue making the payments, but it's not the only option and might not be the best option in your situation. Read on to learn about how reaffirmations work ...
Because the issue is so fraught with risks and uncertainties, the reaffirmation agreement has to be approved by the bankruptcy judge. The judge is tasked with assessing whether the debtor understands the risks, and can pay the reaffirmed loan without hardship.
If you âreaffirmâ the original loan deal, your bankruptcy is no longer a breach of the contract. You give up the benefits of your bankruptcy discharge as to the car loan. So, the car lender emerges from your bankruptcy in the same position that it was when you filed.
After your Chapter 7 is over, the car lender canât sue you for the unpaid balance of the car loan, but it can repo the car to enforce its lien.
In fact, the form that you file with your bankruptcy papers allows you to elect to surrender the car. Surrender may be the best thing if the car is simply too expensive or isnât reliable. You can choose to keep the car and continue paying without reaffirming.
Some courts have held that a debtor who attempts to reaffirm a car loan and has the judge deny approval is still protected from repossession. Those courts read the law to say that all that is required to preserve the right to âkeep and payâ is the willingness to reaffirm.
Failing to reaffirm your debt with the mortgage lender in bankruptcy proceedings means you accept the debt as discharged. Discharged means you release the property back to the bank, and the bank writes off the bad debt.
If you fail to discuss the bankruptcy with the lender in a Chapter 7 and don't reaffirm the mortgage, the lender will be forced to discharge the debt based on the bankruptcy judgment and begin the foreclosure process. Reaffirmation is part of Chapter 13 filings.
Surrendering the Property: Foreclosure. Failure to reaffirm means you are prepared to surrender the property. Unless you actively seek reaffirmation in a Chapter 7 bankruptcy, the mortgage lender might assume your intention is to be absolved from the debt.
Reaffirmation of the mortgage note is a legal contract promising to repay some or all of the loan. Essentially, reaffirmation confirms to the lender that even though you are filing bankruptcy, you want to maintain your home and continue to pay the mortgage.
While Chapter 13 sets forth a plan to automatically establish payment plans, if you fail to meet the obligations of the loan, the bank will foreclose. Foreclosure doesn't mean you'll be on the street the day after bankruptcy.
If part of the loan was modified prior to reaffirmation, any reduction in principal balance can result in a tax write-off for the bank and potential income for you. Seek advice from tax advisers and your bankruptcy attorney to properly discharge things and not have a large 1099 sent to you the following year.
If you file for Chapter 7, the debtor might assume you want out of the house debt completely unless you make contact and request reaffirmation. In a Chapter 13 bankruptcy, an innate assumption exists that you're seeking relief of overall payments and trying to reduce monthly obligations, but you still plan on paying.