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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 17167
Experience:  B.A.; M.B.A.; J.D.
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Should I reafirm my mortgage in Chapter 7 if I want to try

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Should I reafirm my mortgage in Chapter 7 if I want to try and get a modification in the future?

Do not reaffirm. Not a good idea because if you default on your loan in the future, the bank could come after you for the deficiency after a foreclosure or a short-sale. Continue to make payments without reaffirming the mortgage.

Technically, the mortgage is not discharged on your bankruptcy. It is your liability on the note that is discharged, which prevents the bank from coming after you after you default and then after it forecloses on its mortgage. The bank's mortgage is taken care of by the proceeds from a short-sale or a foreclosure.

Again, the deficiency from the short-sale or foreclosure is the thing that is being discharged in bankruptcy if you did not reaffirm the debt—this is your personal liability on the note. If you reaffirm the debt, the deficiency is not discharged—your personal liability on the note is not discharged.

Best wishes,

Customer: replied 7 years ago.
This may not be something that can be answered for sure, but I guess my question should be, can the lender still modify the terms of the loan if I don't reaffirm?
It really depends on the lender. I will caution you to wait a little bit after your bankruptcy filing to attempt modification to make sure that you can really keep up with the payments. Once you modify, you would have a whole new contractual obligation with the lender and if you default, the lender would come after you for the deficiency. You do not get the benefit of the bankruptcy filing if you modify your loan. Your bankruptcy filing would not discharge your obligation on the new loan modification.
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