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grantlawpc, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31
Experience:  United States Bankruptcy Code: Chapter 11 Business Attorney; Restructuring and Recoveries
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I filed bankruptcy a little over 3 years ago and I included

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I filed bankruptcy a little over 3 years ago and I included my house and 2nd mortgage but said I would still make payments on them but now there is no way I can honor this oblitation because of the recession. What will happen to me if I let the bank foreclose?...
thank you,
You are in a very common situation.

The good news is that if you didn't officially "reaffirm" two mortgage obligations through the bankruptcy process, a bankruptcy discharge discharges you from any deficiency claims (the amount that remains unpaid after a bank forecloses).

You did what I recommend to most clients, don't reaffirm, but just keep making payments to the bank. Some banks won't let you do that and will try to foreclose because there is no financing agreement in place. However, it sounds like that didn't happen to you either.

If you really can't afford a house, then it it probably creating quite a bit of stress on you. Walking away might just be the right choice here!

Check with a lawyer to look over the details, but I like your thinking.

One question is - is the house worth more than the debt plus brokerage fees? If so, the answer is completely different!

Let me know if I missed any part of your question!

grantlawpc and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 5 years ago.
I think I did reafirm when I did the bankruptcy. The house is worth less than what I owe and I had a loan thru Rural Houseing department and I have a $20,000 2nd mortgage.
Did you reaffirm both? or just the first?
If you did officially reaffirm, then you are going to be liable for any deficiency on the reaffirmed debt.

Generally, in that case, I recommend you try to get the house sold for as much as you can with the bank's cooperation (which is 50/50 likely).

You can sometimes negotiate a short sale where the bank will either agree to release you as a part of the sale. Depends on bank policy.

I hate reaffirmations. I've never actually had a client sign one.

There is a lot of strategy here if you've reaffirmed the debt that I can't really get into in this type of forum.

Have you tried a loan modification with the lender? It might be worth a call...
Customer: replied 5 years ago.

Thank you. I will check my original bankruptcy paperwork and go from there. Thank you again for all of your help.



Did you find the reaffirmation agreements?