The U.S. Court of Appeals recently held that a bankruptcy attorney could be compelled to testify against his own clients in a case involving the conversion of nonexempt assets into exempt assets, a process commonly known as “exemption planning.”  This case, In re Grand Jury Proceedings, 609 F.3d 909 (8th Cir. July 1, 2010), involved both the assertion of the attorney-client privilege and the attorney work product privilege, in an FBI criminal investigation into whether the debtors had committed bankruptcy fraud.

The debtors G.S. and F.S. were Iowa residents who met with an experienced bankruptcy attorney, J.P., for the purpose of obtaining advice about filing bankruptcy in 2001.  (The parties are identified only by intials in the court’s opinion due to grand jury secrecy rules.)  At that time, G.S. and F.S. had substantial nonexempt assets which would have been subject to sale by the bankruptcy trustee to pay their creditors.  These assets included household furnishings, jewelry, stock holdings, and $300,000 owed to them for the sale of a business, payable over the next seven years.

The attorney warned his clients in writing about the dangers of entering into sham sales transactions with relatives, by which the items sold before the bankruptcy would be recovered by the debtors from their relatives at the same prices after the bankruptcy was finished.  The attorney also warned against selling furniture to G.S.’s father and then keeping the furniture in the debtors’ home, due the unseemly nature of such a transaction.  The attorney similarly warned against involving G.S.’s father in a transaction involving a loan in which nonexempt stock would be pledged as collateral.  However, the attorney did facilitate this loan from G.S.’s father.

In 2003, about one year after the transactions had been completed, the debtors moved to Florida and filed bankruptcy there with a different attorney.  They apparently received no further advice or assistance from the Iowa attorney.  After the bankruptcy was discharged, the debtors moved back to Iowa and repurchased the assets at the same prices for which the assets had been sold to their relatives.

When the FBI opened its criminal bankruptcy fraud investigation of G.S. and F.S., it sought documents and testimony from the original attorney for use before the federal grand jury.  The U.S. district court ruled that neither the attorney-client privilege or the attorney work product privilege applied, and G.S., F.S., and the attorney appealed.

The appeals court agreed with the district court.  It held that the crime-fraud exception to the attorney-client privilege allowed the attorney to be questioned about his bankruptcy exemption planning advice to G.S. and F.S.  The debtors’ conduct in transferring nearly all their nonexempt property, worth hundreds of thousands of dollars, to a close relative, and then reacquiring it later through possible “secret agreements,” distinguished their conduct from permissible bankruptcy planning.  Because this conduct could amount to bankruptcy fraud, the court ruled that the privilege did not apply.

The appeals court further ruled that the original attorney’s work product was not protected by the attorney work product privilege.  This was because there was evidence that the attorney knew about the debtors’ plans to commit bankruptcy fraud, and because there was probable cause to believe the attorney was complicit in the fraud, based upon his facilitation of the loan from G.S.’s father.  The court stated that the attorney “either knew or was wilfully blind to the fact that his clients were entering into sham transactions with relatives so that they could later retrieve their original assets after discharging their debts.”

One of the appeals court judges filed a partial dissent, expressing his view that the attorney had only advised the debtors about routine exemption planning, and that therefore the attorney work product privilege should apply to prevent the attorney from having to testify about his thoughts, opinions, and other aspects of his work product in the case.

American Shingle filed for Chapter 7 bankruptcy in Georgia owing millions of dollars to creditors.  Among the creditors are hundreds of  homeowners who paid the company to roof their home but did not receive services promised.  For homeowners who are owed money, there are a few things to understand about how bankruptcy works and what will happen in the case.

A recent hailstorm in Charlotte NC brought in several out of town roofing companies who went door to door soliciting business to repair damaged roofs.  Many homeowners received insurance checks to cover the cost to repair their roof.    Some hired American Shingle and now they may be stuck with a damaged roof and may be out of luck getting back the deposits and insurance money they paid American Shingle.

In a story in the Charlotte Observer, it is reported that there are over 600 victims who stand to lose their deposits including 136 residents of the Carolinas.

“Actually, that’s the worst news they could possibly hear at this point,” said Tom Bartholomy, president of the BBB of Southern Piedmont. “Based on the amount of debts and assets … it doesn’t look like there would be anything left for unsecured creditors.”

American Shingle and its attorney could not be reached for comment Friday. Company chief executive Carlton Dunko told an Atlanta radio station recently that the company sold 3,500 roofing contracts that had not been completed.

Though the petition filed indicates that there are not enough funds to pay unsecured creditors any of their debts, a Trustee will investigate the company and it’s financials and will determine if there are any assets to use to pay to the creditors.    If there are any funds to distribute in this case, deposit customers may have up to $2,600.00 of their deposits paid at a higher priority before other unsecured creditors.  However the consumer deposit creditors are seventh in line in priority behind administrative, taxes, secured creditors and a few others and so they still may not receive anything at all.

If instructed to file a claim, they should do within the deadline set by the Court because that is the only way to get funds if there is a distribution.   The Proof of Claim is normally mailed from the Court, or you can find one here:  Official Bankruptcy Proof of Claim form Be sure to check the box on the right hand side if you are entitled to the deposit claim under the Bankruptcy Code Section 507(a)(7).

Chapter 5. Creditors, the Debtor and the Estate

Subchapter I. Creditors and Claims

11 USC § 507.  Priorities

(a) The following expenses and claims have priority in the following order:

(7) Seventh, allowed unsecured claims of individuals, to the extent of $1,800 [$2,425 effective 4-1-07. Adjusted every 3 years by section 104.] for each such individual, arising from the deposit, before the commencement of the case, of money in connection with the purchase, lease, or rental of property, or the purchase of services, for the personal, family, or household use of such individuals, that were not delivered or provided.

Customers of the company will likely be notified of the filing by the Bankruptcy Court very soon.  A Notice of Filing and Section 341 Creditors' Meeting will be mailed to creditors, which will give the date of the creditors' meeting, and directions on whether or not a Proof of Claim should be filed.

Creditors who receive the notice do not have to go to the hearing unless they want to go, and it is not usually something that a small creditor can get much satisfaction from.  Creditors often don't show up at the creditors' meeting.  Some questions may be answered at the meeting, but the most important one, "Will I get the money owed to me?", is often not known at that time.  No judge is present at the creditors' meeting so  customers should not expect to have their day in court at that time.

The Trustee appointed in the case controls the meeting and decides who gets to talk, what questions are allowed, and how long the meeting goes.   Depending on how many creditors attend, what has to be covered and what the Trustee plans to ask, the creditors' meeting may not take very long since it is really just a starting point for the Trustee to begin his/her investigation.  Any important issues have to be dealt with in court, before the Judge.

Read more: http://www.charlotteobserver.com/2010/09/04/1666492/american-shingle-files-for-bankruptcy.html#ixzz0yby7T8PY

Fox News has also reported on this story:

BBB: American Shingle Bankruptcy Bad News for Customers

When you file bankruptcy, you claim “exemptions” in property you wish to keep free of any claims of the bankruptcy trustee.  And the “homestead” exemption–the exemption used to protect your home–is the most important exemption for many debtors.

But what if your home is the movable kind?  And I’m not just talking about mobile homes here.  What if you’re, as the late Chris Farley put it in that famous Saturday Night Live skit, “livin’ in a van down by the river.”  What if the van is your home? Or an RV?  Can you claim it as your homestead?

Of course you could exempt that property as a motor vehicle, but there’s a problem with this approach.  The motor vehicle exemptions in many states and under the federal exemptions are a bit stingy.  The homestead exemption, by contrast, is much more generous.  After all, homes are more necessary than cars.

Fortunately for one New York debtor, the Bankruptcy Court for the Western District of New York allowed him to claim a homestead exemption in his Peterbilt semi-tractor.  In In re Tullar, Case No. 10-11214-k (Bankr. W.D.N.Y. 2010), the debtor used the vehicle to produce income–he hauled trailer loads with it.  But he also lived in the sleeper cab of the semi, which as most sleeper cabs do, had a bed, lavatory, refrigerator, electricity, and other comforts of home.

In his well-reasoned opinion, Judge Michael J. Kaplan allowed allowed Mr. Tullar to exempt two-thirds of the equity as his homestead based on the amount of time the debtor used the semi as his home, essentially dividing the time in which he used the semi as a tool of the trade hauling loads and the time he used the semi as his home.  The New York exemption statutes conflicted in two areas leading the Court to fashion this unique remedy based on equity–fairness principles.  As Judge Kaplan remarked, “it would be a tragedy if the debtor lost both his livelihood and his ‘home’ because of non-exempt equity.”  It would also have been legally incorrect because Mr. Tullar clearly established that he used the semi tractor as his home.

The court’s ruling resulted in Mr. Tullar being left with $7800 in non-exempt equity in the semi tractor.  The Court suggested a Chapter 13, which would allow him to repay that non-exempt equity and keep the semi tractor.  The court also suggested that if Mr. Tullar could not afford a Chapter 13 plan that the Chapter 7 trustee might consider allowing Mr. Tullar to repay the non-exempt equity over time.

Some states have exemption statutes which are much clearer.  For example, in my Charleston, South Carolina bankruptcy practice, I rely on our South Carolina exemption statute which plainly allows personal property to be claimed as the debtor’s homestead.  Each South Carolina debtor receives an exemption in the amount of $53,375.  (For married couples, that amount would double.)

Like so many other bankruptcy issues, the law is different from state to state.  If you have a houseboat, or semi tractor, or even a van down by the river that you use as your home, you need to know the law applicable to your case.  If you’re thinking about filing bankruptcy, contact a bankruptcy lawyer in your area to find out about your exemption rights.

Many times people come into my office and want to file a chapter 7 but they are worried about losing their home in bankruptcy.  Often, this fear probably means they have delayed seeking some advice for a very long time.

In most instances, the chapter 7 trustee is not going to sell your home to pay your creditors.  Why is this?  Well, under bankruptcy law, you are entitled to exempt a certain amount of property.  That means you get to keep a certain amount of property so that you are not completely destitute.  For example, under the federal exemptions, a debtor can exempt up to $21,625.00 in equity in real estate used as the debtor’s residence.  For a married couple, this is doubled (both are allowed to claim this exemption).  But, many states, including North Carolina, have opted out of the federal exemptions so in North Carolina, a debtor may exempt up to $35,000.00 in equity in residential real estate (again, for a married couple jointly owning the real estate, this is doubled).

In order to determine your net equity, you take the value of your home and subtract any mortgages that you have on it.  For example, if your house is worth $200,000.00 and you have a first mortgage on which you owe $110,000 and a second mortgage on which you owe $40,000, you have $50,000 in net equity.  If you do not have more equity than you can exempt, the chapter 7 trustee is not going to be interested in selling your home.  In addition, it will cost the trustee money to sell the house and that also factors in the analysis.

Another very important exemption involves real estate held as husband and wife.  This special property interest is called tenants by the entirety.  Real estate held as tenants by the entirety is not subject to the claims of individual creditors.  This means that if property is held as husband and wife, neither spouse’s creditors have any claim against the real estate.  It is possible that if the husband and wife debtors own their home and do not have a mortgage and their only creditors are credit cards in either husband’s name or wife’s name, the real estate will not count as an asset to be sold by a chapter 7 trustee.

Once it is determined that the home does not have any equity over what can lawfully be exempted, the debtors will be required to continue to make the mortgage payments on the home.  As long as the payments are made to the mortgage creditor(s), the debtors will not be in any danger of losing their home.

So, if you think that you need consider bankruptcy but you are afraid you may lose your home, talk with an experienced bankruptcy attorney.  Most likely, you will have nothing to fear as long as you keep making your monthly mortgage payments.

Sigh.  I hate loan modifications.  I just got off the phone with a potential bankruptcy client.  This call was from yet another borrower who has been working on a loan modification for months, but now is looking for a attorney to file an emergency Chapter 13 to try to save her house.  In this case, the borrower was told she was approved for a loan modification but then the lender lost the paperwork.  Since lenders usually proceed with filing for foreclosure at the same time they are supposedly working with the homeowner, they sold her house at foreclosure!

Now this poor woman is trying to find a lawyer who can file an emergency Chapter 13 to stop the foreclosure and allow her to either catch up her payments or finish the modification that she had been promised.  And she is trying to find a lawyer the day before a holiday weekend, making it that much harder to get help in the few days she might have to save her home.

I assume that there may be some loans that are being modified, but in my world all I see are people who were told to stop paying their mortgage or to pay a lower trial amount while they were in the modification process, only to find out that they are not going to get any help and they owe months and months of back mortgage payments or they will lose their home.

Another couple came to see me that I was able to help, but delaying seeing me cost them thousands of dollars.   You see, they were seeking a modification because the husband had lost his job and they couldn’t pay their mortgage and their credit cards too.  So the mortgage company told them to make a reduced payment while seeking modification, and naturally the couple used the “saved” money to make payments on their credit cards.  After many months of working with the mortgage company their modification was denied, and they were told they had to make up the difference between what their regular payment amount and what they had been told to pay … over $15,000.00! 

This couple has no way to come up with that much money so their best option appears to be filing a Chapter 13  and catching up the missed payments over time.  They had spent money that should have gone to their mortgage on minimum payments on their credit cards (so they barely touched the debt balances) and they are filing for bankruptcy anyway.    Had they come to see me in the beginning, I would have shown them how they could afford to pay the mortgage because they were eligible to reorganize the credit cards in bankruptcy, and they would have been 9 months into repayment rather than being $15,000.00 further in the hole.   Not to mention saving them many sleepless nights worried about the unanswered modification.

See also:

Does Working On A Mortgage Modification Stop Foreclosure? by Susanne Robicsek, North Carolina Bankruptcy Attorney

Consider Non Bankruptcy Alternatives For Debts by Susanne Robicsek, North Carolina Bankruptcy Attorney

Mortgage Mod Band-Aid on Gaping Wound, Need Bankruptcy Mod by Jill Michaux, Bankruptcy Kansas Attorney

Foreclosure, HAMP & Chapter 13 Bankruptcy by Kevin Gipson, New Orleans Bankruptcy Attorney

Debt Settlement Companies Come Under Increasing Scrutiny from Regulators by Jonathan Ginsberg, Atlanta Bankruptcy Attorney

Considering Debt Settlement? Perhaps Bankruptcy Is Cheaper And More Efficient by Adrian Lapas, Eastern North Carolina Bankruptcy Attorney

No Modification For You!  by Carmen Dellutri, Southwest Florida Bankruptcy Attorney

Can Bankruptcy Help Save Your Home From Foreclosure? by Susanne Robicsek, North Carolina Bankruptcy Attorney

Are “Debt Management” Programs a Scam? by Brett Weiss, Maryland Bankruptcy Attorney

Many People Keep Their Homes When They File For Bankruptcy by Susanne Robicsek, Charlotte NC Bankruptcy Lawyer

You’ve finally hired a bankruptcy lawyer.  You’ve done your research and found a lawyer with whom you think you can have a good working relationship. How do you preserve that good working relationship through the course of your bankruptcy case?  I’m going to focus on things that are particularly relevant to bankruptcy cases, rather than lecture you about things you should have learned in kindergarten.  Here are a few basic rules about how to maintain that relationship and stay on your bankruptcy lawyer’s good side.

The bankruptcy process is paper intensive, and the paperwork can be burdensome.   If I become frustrated with a client, it is almost always about paperwork.  Pay attention to what your attorney needs from you.  If you have forms to fill out, fill them out completely.  If the answer to the question is “none,” write that down.  If it doesn’t apply to you, write that down, too.  Don’t leave forms blank.  And, as amusing as you may be to your friends, your bankruptcy paperwork is not the place to indulge in snarky remarks.  A client recently added certain editorial comments to my form relating to the value of his assets.  In the column marked “value,” I expected that he would write down a number that corresponds to his opinion of the value of the item in question.  Instead, he had not recorded a single numerical value, but instead had noted “hand-me-down” or “not worth spit”  or some other pithy comment beside the description of every single asset.  While those responses may, in fact, be true, neither I nor the bankruptcy judge are amused.   Treat the paperwork like the serious matter it is, and stay on your bankruptcy lawyer’s good side.

In addition to filling out paperwork, your bankruptcy lawyer will ask you to provide certain documents, like tax returns and pay stubs. Your attorney ask you to do this because the court or the trustee require it.  They are your documents, and you need to invest the time in collecting them.  When you have everything, take it to your lawyer all at once.  Don’t take your lawyer a few things at a time.  It wastes your time, it wastes the lawyer or paralegal’s time, and it multiplies the amount of work you are both going to have to do.  For example, let’s say that a client brings me everything I have requested, except his pay stubs for the last three months.   Three weeks later, he brings me the pay stubs, but after three weeks, the bank statements the client brought are now out of date, and a new collection agency has begun contacting the client.  So the client promises to update that information, but when he gets back in a week or so, he’s gotten paid again, so now the pay stubs are out of date.  And while we were going around in that particular circle, the credit counseling certificate expires.  So, you see the futility of gathering and providing information to your attorney piecemeal.  Get it all together, and take it to the attorney all at once.  You may still have to update a couple of items, but it won’t be the endless paper chase of trying to do it a little at a time.

Read absolutely everything your lawyer sends you.  If she thought it was important enough to write it down to send to you, it is important for you to read.  It may be as simple as directions to the courthouse where your hearing will be held, or it may tell you how what you need to do to get the relief you wanted.  It may even tell you what will happen if you don’t do the things you are supposed to do.

Filing bankruptcy can be a stressful process, and your attorney understands that, and wants to make it as simple and painless for you as possible.  If you help her do that, and stay on her good side, you’ll both be happier as a result.

Before the Home Affordable Modification Program (HAMP) came into existence if a client’s house was in foreclosure you had two basic options:  Either file a Chapter 7 bankruptcy and give the house back to the creditor, or file a Chapter 13 and pay the arrearages though a Chapter 13 Plan.  Very rarely would a creditor voluntarily agree to modify a loan.

With the introduction of HAMP borrowers have the hope of a modification of their loan dangled in front of them as a potential option to bankruptcy.

I, for one, believe that HAMP is a false hope.  I am not alone in this view of HAMP as a false hope.

Why do I call HAMP false hope?

1. The percentage of individuals that have been approved for a HAMP loan modification are in the single digits; and,
2. While the loan is being reviewed for a modification, the creditor is supposed to stop or delay a foreclosure proceeding.  Unfortunately, there is no penalty if the lender fails to follow this requirement, and many borrowers have an incorrect belief that the foreclosure process will stop.

Add to the false hope the fact that the changes to the bankruptcy laws from the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) make it difficult to file an emergency bankruptcy.

Specifically, BAPCPA requires that the debtor undergo pre-filing credit counseling before his bankruptcy can be filed.  Failure to do so results in the bankruptcy being dismissed.

Imagine that you are in the process of a HAMP modification review and at 2:00 p.m. on the day before your house will be sold at a foreclosure you hear from the creditor that you don’t quality for a modification.

Will you be able to find an attorney that can meet with you, get your credit counseling completed and get an emergency bankruptcy petition filed before the foreclosure?

Possibly!

What if you learn at 11:30 a.m. that the application has been denied and the foreclosure sale was for noon of that same day?

Do these two scenarios sound far fetched?

Well, I met with two clients last week with these exact same facts.

Both had wanted to keep their houses.  I could only help the first one stop the foreclosure.

Don’t rely on being one of the chosen few that will get a HAMP loan modification to save your house if you are in foreclosure.

Consult with an experienced bankruptcy attorney about your options and, if necessary, be prepared to file bankruptcy to protect your home.

A sure way to stop creditors from contacting you is to file for bankruptcy protection.  Under the Bankruptcy Code, once you file with the Court, an order called the “automatic stay” goes into effect immediately and without you or your attorney doing anything more than filing your petition.

But, if you are saving your money to pay the attorney’s fees and filing fees for your bankruptcy case or you just do not have the money available at this time to avail yourself of bankruptcy protection, what can you do?

The Federal Trade Commission has a nice “Frequently Asked Questions” (FAQ) detailing what creditors can and cannot do.  A link to this website is included here.   This gives you a broad scenario of what creditors can and cannot do.   While this FAQ is useful and informative, it is written broadly and for a very wide audience.

There are some limitations with this FAQ.  First, the FAQ itself references “debt collectors” and actions and limitations imposed under the Fair Debt Collections Practices Act (FDCPA).  Generally, the FDCPA is limited to “debt collectors” and does not apply to creditors collecting their own debts.  This is a very important distinction to remember.  However, most states have enacted a state law version of the FDCPA and that legislation may apply to creditors collecting their own debts, as in North Carolina.

Most importantly, as set forth in the FAQ, you have the right to write to the creditor and tell them to leave you alone.   The FAQ further advises to mail the letter by certified mail, return receipt requested so that you can document that your letter was actually received by the creditor/collection agency (they will lie and say that they never received it).  When writing your creditor or the collection agency, avoid language that acknowledges the debt–write in generalities about stopping all contacts.  This should stop the collection agency from contacting you.

By doing this, you can gain yourself some breathing room while you get your money together to file bankruptcy.  Also, if the collection agency or creditor continues to hassle you, you may have a claim against the creditor that you can then assert in your bankruptcy case.  How great would it be to have the debt discharged in bankruptcy yet the collection agency pay you some money because they violated the FDCPA.

Can a judgment creditor seek to garnish funds in the possession of the Chapter 13 Trustee after a Chapter 13 case is dismissed?  The answer is yes in Orlando.  A recent bankruptcy decision in the Orlando Division of the Middle District of Florida holds that if a Chapter 13 Debtor’s case is dismissed and the Chapter 13 Trustee is still in possession of funds directed to go back to the debtor, a judgment creditor can run to the State Court and request an Order of Garnishment on the Chapter 13 Trustee.  Wow, what a horrible result.  I must admit that there is case law on both sides of this issue, but the Orlando Court followed the line of cases allowing the garnishment.

In this Chapter 13, the Debtor found herself in a position where the monthly payment became impossible to make.  Therefore, the Court had to enter an Order of Dismissal.  Along with that Order was a directive to the Chapter 13 Trustee to return monies held in trust to the Debtor pursuant to 11 U.S.C 1326(a).  Before the Trustee could mail off the money to the Debtor, a savvy creditor’s attorney was able to procure an order from the State Court allowing a garnishment.  As much as I hate to admit it, I always give credit where credit is due, and it is certainly due here.  The Creditor’s attorney made a bold move, and it paid off.

The Court acknowledged that there were cases on both sides of the issue; however, in her mind, the better line of cases were the ones allowing for garnishment.  So, a warning to all Debtor’s attorneys out there.  Please don’t promise your clients that they will receive any money back from the Chapter 13 Trustee when their cases are dismissed, especially if there is a judgment creditor lying in wait.

You’re told you need to “affirm” or “reaffirm” your mortgage loan to keep your home despite your bankruptcy.  Don’t do it.  Here’s why.

First, I’ll put on my lawyer hat.  It’s called “reaffirm”, although it’s a weird word and people often only remember “affirm”.  It means that you want to re-agree to the loan agreement after your bankruptcy case was filed.  (Re-agree = reaffirm, get it?)

Now, a mortgage loan actually has two parts.  The first part of a mortgage is the loan itself, no different than a credit card debt.  We call this the personal loan, or personal obligation, or personal debt.  You don’t pay, you get sued and you can get your wages garnished and your assets seized - unless you filed a bankruptcy case.  That stops enforcement of the personal loan part.

The second part of a mortgage is the lien on your home that you agreed to.  The bankruptcy case does not affect your that mortgage lien on your home (unless your home is totally underwater or a multifamily home where another unit is rented out, but that’s another discussion).   If you don’t pay the mortgage loan, that lien means that you lose your home.  This is called foreclosure.

Since there are two parts to  a mortgage loan, the loan itself and the lien, and since bankruptcy does not affect the lien, what’s left is bankruptcy getting rid of the loan part.  You file a bankruptcy case and you cannot get your wages garnished or your non-home assets seized. 

Remember, that lien on your home was not affected by bankruptcy so you still lose your home if you don’t pay the mortgage.  But that’s all you lose.  You do not lose any wages or other non-home assets.  If you pay your mortgage, you get to own your home just as if there was no bankruptcy.

Reaffirmation looks at that first part of the mortgage loan, the personal loan itself.  Like all other personal debts, including credit cards, the bankruptcy stops the mortgage lender from garnishing your wages or taking your non-home assets.   Reaffirmation means that the personal loan is once again enforceable even though you filed bankruptcy. 

Reaffirmation is a one way street.  There’s no benefit to you.  It gives the creditor the right to sue you if you default in the future, and therefore it gives the creditor the right to grab your wages and non-home assets which it cannot do if you refuse to reaffirm. 

Y9u cannot be forced to reaffirm.  You get to keep your home without a reaffirmation so long as you make all your payments on time. 

The mortgage lenders may be vague on this last point, so I’ll say it again.  You cannot be forced to reaffirm.  You get to keep your home without a reaffirmation so long as you make all your payments on time.

The lender wants you to reaffirm.  It wants that right to take your wages if you default later.  So it may refuse to send you monthly statements and stop accepting online payments.  There’s a simple way to deal with this, and that’s to remember to write a check each month on time. 

I think this behavior by the lender belongs in a kindergarten sandbox.  Don’t let the lender push you into something that does not help you.

This stuff also applies to car loans.

Here’s my final thought.  You may really need that freedom to walk away from your home even years after your case is over.  You might get sick, or hurt, or divorced, or laid off.  Terrible things happen.  I’m sure you never thought you would have needed a bankruptcy in the first place.  Refusing to reaffirm preserves your opportunity to walk away from the house if you need to, at any time in the future, and it still lets you keep the home if nothing bad happens and you make all the payments.  You get the best of both worlds.