My wife and I recently completed a Chapter 7 bankruptcy and our unsecured debts have been discharged. We still have a 1st mortgage on our home that is current and we will continue to make those payments. Our 1st mortgage bank wants us to reaffirm the debt (home loan). What do you advise?
State/Country relating to question: Massachusetts
Hi - my name is XXXXX XXXXX X'm a Bankruptcy attorney here to assist you.Why does the mortgage company want you to re-affirm your mortgage?
They don't give a reason...just say it's their standard procedure to request it after a bankruptcy. Our home now is worth about 50% of the mortgage loan balance, so they are probably worried we'll just walk away from it (although they didn't say that). We'd rather not reaffirm, but are there reasons why we should?
Thank you for your response.
Re-affirmation of any debt - including one's mortgage - is rarely a good idea. Re-affirmation means that if something happens and you can no longer pay your mortgage. the mortgage company can get a deficiency judgment for the balance, which could then be used to garnish your assets - such as bank accounts or valuable property, such as a car.
Additionally, it is not even possible to re-affirm any debts after a Bankruptcy case has been closed - unless one first files an expensive motion to re-open the case, as re-affirmation can only occur while a Bankruptcy case is open.
In short, it would not be a good idea to re-affirm your mortgage.
I think this is what you wanted to know. If not, please let me know.
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