reaffirmation Tag

20 Jul Top 3 Reasons Not To Reaffirm a Mortgage in Bankruptcy

Bankruptcy debtors should not reaffirm a mortgage. Reaffirmation of debt in bankruptcy prevents the debt from being discharged, a process explained in greater detail by Kevin Gipson in Chapter 7 Bankruptcy and the Reaffirmation Agreement. Yet, lawyers continue to debate whether to reaffirm a mortgage, without compelling argument on the affirmative side, even though state laws protect a homeowner, who continues to make voluntary mortgage payments without reaffirming the mortgage, from foreclosure, so long as payments are current or brought current within a reasonable time. So why should one reaffirm? Distinguished Missouri bankruptcy attorney Wendell Sherk once said "[T]he only reason to sign them is in order to get continued reporting of good payment status on the credit reports". In practice, mortgage companies dangle the prospect of reporting future good payment history to credit bureaus as a way for bankruptcy debtors to improve the credit score or qualify for future loans. If that is the only reason to sign, then that is actually a compelling reason not to sign. The unsaid corollary of that offer is that same mortgage company will report all information, good and bad, to the credit bureaus. And that information, both the good and the bad, can damage a credit score or derail a loan application. The more accurate part of the reporting argument is that the borrower should not want mortgage payments reported to the lender, because: 1. The debt to income ratio is minimized by not reaffirming the mortgage; 2. The likelihood a borrower actually makes mortgage payments on time is small; 3. The borrower can make the payment late, miss a payment here or there, catch up payment, pay whatever late fees accrue, all without risking a negative tradeline on the credit report.
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01 Jun Sub-prime Loans are Back – this time in Auto Loans

credit for credit challenged car buyersAn article in this past week's issue of the online publication Collection & Credit Risk raises the question of whether the spread of sub-prime loans in industries other than mortgages could prompt a replay of the Great Recession of 2009. According to credit bureau Experian, financing for new and used vehicles to borrowers with credit scores less than 680 comprised almost 42% of all automobile financing during the first quarter of 2011, and the trendline for this type of financing is on the rise. Industry experts note that the wholesale (used) car market is very strong. Repossession is relatively easy and used car valuations are up. This has attracted more lenders to market towards credit challenged individuals. GM, which sold GMAC and exited the car financing business several years ago, has quietly re-entered the vehicle financing business by purchasing a sub-prime lender (now named GM Financial). Other large financing companies are expected to follow suit.
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12 Sep Discharged Debtor Signs Mortgage Modification to Help Former Co-Debtor

Reaffirming a debt, especially a mortgage debt, is not a decision that should be entered into lightly as I discuss in more detail on my Atlanta bankruptcy web site. I recently received an email from a lady who apparently discharged her personal liability for a mortgage in a Chapter 7 then post-discharge entered into a "mortgage modification" that put her back on the hook:
Im on a home loan with my x-boyfriend after the break up I filed chapter 7 in 2005 it was discharged. He lives in the home in FLorida and Ive been living in Georgia for the past 7 years. He stopped making payments on the house and went into foreclousure procedings. Since he will not refinace the home to remove my name. I am still on the mortgage. My question is,In 2008 in order to stop foreclousure proccedings and my name is still on the mortgage I had to sign a modification he paid 5,000 to stop the foreclosure and to keep the house. What does modification and bankruptys mean for me? The mortgage company verbally tells me over the phone I am not finacialy responsiable but wont give me anything in writting. I am trying to assume a home loan here in Georgia but since on the credit reports my name is listed on the mortgage they are having second thoughts about givng me a home loan. Does this modification take me out of the bankruptys law that I filed thru Georgia in 2005 and make me responsiable agian for that loan? What is the diffrence from assuming a loan and a modification? Did I have to sign a modification just because my name is on the loan? Does my bankrupty still stand and make me not responsiable finacialy for the loan.
Here are my thoughts: Assuming that you did not reaffirm the mortgage loan back in 2005, your personal liability on the mortgage debt was eliminated when your Chapter 7 was discharged. Your name may have remained on the title, but the mortgage company should not have kept you as an obligee on the mortgage note.
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11 May Is Reaffirmation of a Mortgage Required?

When you file for bankruptcy, you are generally given three choices with regard to a secured debt; that is, a debt that is attached to a lien on something you own. The Bankruptcy Code specifically deals with reaffirmations and when and how they must occur. That information appears elsewhere on this site and there is debate over whether there is a fourth option to keep the collateral and continue paying the debt without reaffirming. But, do you need to reaffirm a mortgage too? When the Bankruptcy Code was changed in 2005, much emphasis was placed on reaffirming secured debt. The lenders proposed, and paid for, a change in the law to require a consumer to reaffirm a car loan or the lender would be given the right to ignore the bankruptcy and repossess the car. The same is true for loans on other kinds of personal property. When you do not reaffirm a loan secured by personal property, the automatic stay of the bankruptcy case is automatically terminated. It is up to the lender and state law what happens next. But what about real property? What about your home? Do you need to reaffirm a mortgage to keep it and be allowed to keep paying the payments when you file for bankruptcy?
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