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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31788
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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Chapter 7 Bankruptcy in Washington State Do I have the option

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Chapter 7 Bankruptcy in Washington State
Do I have the option to "reaffirm" my mortgage at some point in the bankruptcy process? If so, when is the latest I can do that? Does the bank pretty much dictate the terms of that reaffirmation or does bankruptcy law provide me with some leverage at all (ie. does the bank have to abide by certain regulations with regard to mortgage reaffirmations?)
Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question.

Are you current on your mortgage?
Customer: replied 4 years ago.

No. I've been trying to work out a payment deferral plan with the bank via the Making Home Affordable UP (Unemployment Program)

for the past few months and I believe they now have all of the info required to do it. I'm behind by 3 payments and hope to file for chapter 7 in the next week or so.

Ok. Thanks for the information.

As for timing, you can reaffirm a debt at anytime up until the discharge date. However, most reaffirmation agreements occur after the 341 meeting of creditors. Reaffirming the debt means that you're agreeing that the bankruptcy doesn't affect the particular debt. In other words, it is as if you never filed bankruptcy as to the reaffirmed debt. So, there's no negotiation of the terms of the reaffirmation because you'll have to accept the terms of your original agreement.

Generally, IF a debtor is current on the loan, the creditor will agree to a reaffirmation. However, if a debtor is NOT current, it is highly unlikely that the creditor will agree to a reaffirmation agreement because the loan is already in default. Instead, the creditor would likely ask the court to lift the automatic stay and proceed with foreclosure on the property.

That said, it is still POSSIBLE to reaffirm the debt , but you're going to have to work out a deal with the lender and try to convince it to allow the reaffirmation as opposed to going straight to foreclosure. Unfortunately, it is just not guaranteed since the loan is not current/in default. If the loan were current, it would be no problem to get the reaffirmation done.
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