I'm still in the same situation. And I'm not sure how to proceed. I have a mortgage and a home equity loan. However after my wife declared bankruptcy we were advised by our BK lawyer to no reaffirm the loan, particularly because between both loans that would clearly put us underwater. Both loans have been discharged and are not showing up on our credit reports. We have now stopped paying the home equity in the hopes that the bank will agree to a cash settlement on that loan.Then maybe after that is resolved I would want to reaffirm the 1st mortgage and re-finance under HARP. (Even though my lawyer is telling me not to reaffirm the loan.) Is all this advise-able or is there something else I should be doing to get lower interest rate, keep the house and restore my wife's credit.
State/Country relating to question: Illinois
Just called bunch of lawyers and mortgage people and got mixed advise.
Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.
If you are discharged, then the case is over and you cannot reaffirm the debt.
Reaffirmations really only protect the creditor.
True, the loans are no longer reported on her credit report.
Are the loans in your name too?
I assume just your wife filed the bk as well.
The bank is telling me that I need to reaffirm the loan to refinance under harp. IF I can't do that why else can I do to re-finance?
Yes the wife filed BK and the loans are in both our names.
Also I was told that it's up to a judge to decide if the mortgage can be reaffirmed and that goes by a case by case basis.
ok, so if you did not file, then you are legally responsible for payment on the loans and it can affect your credit for non payment.
The debts are discharged for your wife, not you.
Therefore, you would have to negotiate with the 2nd, and any savings could be taxable as income to you.
But they don't show up on my credit report either. I don't know if that was a mistake by the bank.
As to qualifications under Hamp, you would have to work with the lender. Since her liability is gone, you may be able to do it under your name alone.
Interesting that they are not showing up. Credit reports are only as good as who reports to them.
Is the bankruptcy discharged?
Maybe under hamp they can re-do the loan in just my name. But they are telling me that with HARP the only way to take her off the loan is if we were divorced. Also I was told if I have any money in the bank I would not be eligible for HAMP modification and that the only way they take you serious is if you stop paying the mortgage.
And if I do have money in the bank they would go after that or disapprove of the HAMP Loan Modification.
to qualify you will usually need to be in default and show that you don't have the means to pay as agreed and no money in the bank either, yes.
You may want to look into a straight refinance, consolidate the loans together into a more affordable payment if it is available...you'll usually need to show some equity though to make that happen
is the bankruptcy discharged?
So it sounds like I'm in limbo because HAMP and HARP won't work and a regular re-finance won't work since we are under water. Maybe my only option is a Short Sale. Or just continue to stay and pay until the equity returns into the home.
And just play hard ball with them on the 2nd and offer them 10% of the loan take it or leave it.
yes the bankruptcy is discharged
ok, it's too late to reaffirm, once the case is dicharged, thats it, cannot reopen to reaffirm.
Or another lawyer suggested I do a chapter 7 to strip the lein.
So, that leaves you with regular payments or just negotiating with your lenders on a refinance or loan modification. The loan mods have some requirements, so you need to meet those requirements.
You can file chapter 7 sure.
do you owe more on the first than the home is worth?
There is really no real stripping of liens. You can discharge the debt in the ch7 sure, but the lien will stay on the property to be resolved when the property is sold. If you file chapter 13 you can pay down the loan if there is no equity for it to attach to, but you will pay it 10-100% based on the facts in the case.
With the 1st we are slightly above water, but with the two we are clearly underwater.
Maybe they said Chapter 13
if there is equity, then the lien will stay attached. it must be wholly unsecured to do what I described.
Did you have any other questions?
No I guess not. Thanks for your help.
So, you will need to work with both lenders since you are on the loans or just continue payments, perhaps try short selling and get something more affordable as well. You can file ch7 to discharge the loans, and pay on the first. You can deal with the 2nd to remove their lien or just wait until you sell it down the line. Those are the only options I see if you can't get into the HAMP program
Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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