I'm confused. We filed Chapter 7 bankruptcy in October 2008. It was discharged in January of 2009. The Case Closing Report was issued in August 2010. We kept our home in the bankruptcy and are current in all payments. We have been trying to get a loan modification on this house. The mortgage company would not even talk to us until they received the case closing report. Now they say even though they were not included in the bankruptcy, that if we should default on the mortgage loan we would still be protected by the bankruptcy and they cannot negotiate a modification. Is this true or another "don't bother me" tactic?
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Personal Bankruptcy Retained home in bankruptcy
- Thread Starter Curtis
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army judge
Super Moderator
Did you file the BK pro se or use attorney?
If you used an attorney, ask him/her about this.
You do know, I hope, the lender is not required to renegotiate the loan.
By the way, the BK, if discharged no longer protects your home.
There could one exception, if the mortgage was discharged and you and the lender failed to reaffirm the note. If that happened, the lender might be screwed and you could have unknowingly had the debt discharged. If that happened, I'll bet the lender will negotiate with you real quick!!!!
If you used an attorney, ask him/her about this.
You do know, I hope, the lender is not required to renegotiate the loan.
By the way, the BK, if discharged no longer protects your home.
There could one exception, if the mortgage was discharged and you and the lender failed to reaffirm the note. If that happened, the lender might be screwed and you could have unknowingly had the debt discharged. If that happened, I'll bet the lender will negotiate with you real quick!!!!
despritfreya
Active Member
If you did not reaffirm the loan (and you should not have), the underlying debt has been discharged. The lien against the property survived therefore, regardless of any "loan modification" attempt, if you fail to service the lien by making "voluntary" payments on the loan, the lender will foreclose.
If you actually signed a reaffirmation agreement (dumb to do) and the Court approved it then you are 100% responsible for the debt, unless you live in an anti-deficiency state.
The lender DOES NOT have to agree to modify anything. The fact that you did not reaffirm the loan IS NOT a bar to modifying the loan. HOWEVER, the lender's representative is most likely 1) not too bright or 2) just does not want to deal with this non-issue. Either way, if the lender says it can't do it because you did not reaffirm, while that is incorrect, the lender can use it as an excuse.
There is a split in thinking as to the effect of actually doing a loan modification after discharging the debt in a bk.
One side says there is new consideration (the modification) therefore there is a new debt and you are responsible if you default.
The other side says, "once discharged always discharged" and doing a loan modification is not a reaffirmation agreement and therefore does not revive or create a new debt. If you default the lender can only look to its collateral. I am of this school of thought.
The reality is you most likely will not get the loan modified as very few consumers do. Keep trying and if it does not work you can just walk away.
If you actually signed a reaffirmation agreement (dumb to do) and the Court approved it then you are 100% responsible for the debt, unless you live in an anti-deficiency state.
The lender DOES NOT have to agree to modify anything. The fact that you did not reaffirm the loan IS NOT a bar to modifying the loan. HOWEVER, the lender's representative is most likely 1) not too bright or 2) just does not want to deal with this non-issue. Either way, if the lender says it can't do it because you did not reaffirm, while that is incorrect, the lender can use it as an excuse.
There is a split in thinking as to the effect of actually doing a loan modification after discharging the debt in a bk.
One side says there is new consideration (the modification) therefore there is a new debt and you are responsible if you default.
The other side says, "once discharged always discharged" and doing a loan modification is not a reaffirmation agreement and therefore does not revive or create a new debt. If you default the lender can only look to its collateral. I am of this school of thought.
The reality is you most likely will not get the loan modified as very few consumers do. Keep trying and if it does not work you can just walk away.
bankrupcyus
Banned
Filing for bankruptcy is not easy and what it requires is your thorough understanding of the bankruptcy laws. As per the bankruptcy law, it as a typical situation where a company or the individual fails to meet the financial requirement.
fredrikklaw
Moderator
Yes it's true!
Yes, it is quite true what the mortgage company is telling you!
What you are doing now, is making payment on a secured debt in good faith and as things stand, there is nothing the mortgage company can do should you decide to stop the monthly loan payments and for all intents and purposes, the mortgage has been discharged and the house is yours simply because the lender did not attend the creditors meeting that was arranged by the trustee to present their case. In fact, they would be in deep trouble with the bankruptcy court if they make any kind of approach towards you as they will be in contempt of the court's discharge order.
The only way to remedy this situation is for the lender to make a motion to the bankruptcy court for an order for Stay of Discharge, which if granted, will take away the discharge protection you have now and the lender can then proceed against you as per normal. I think the main reason that the lender has not as yet moved for such an order is that you have continued to make the payments on the loan and they see no reason to come and ask for the house.
What you can do to move matters along and enable negotiations between you and the lender, is to contact the bankruptcy trustee who handled your petition and say that you would like to reaffirm your debt with this particular lender. But be very careful as this could turn out to be a double edged sword.
You see, as things are at the moment, the lender is content to keep receiving the payments and cannot alter the loan in any way, shape or form. But if the loan is reaffirmed, they may very well take some drastic measures like recalling the loan, raising the interest rates, or some other adversarial and retaliatory action. Then again, they may not; you just need to make a very informed decision.
fredrikklaw
Yes, it is quite true what the mortgage company is telling you!
What you are doing now, is making payment on a secured debt in good faith and as things stand, there is nothing the mortgage company can do should you decide to stop the monthly loan payments and for all intents and purposes, the mortgage has been discharged and the house is yours simply because the lender did not attend the creditors meeting that was arranged by the trustee to present their case. In fact, they would be in deep trouble with the bankruptcy court if they make any kind of approach towards you as they will be in contempt of the court's discharge order.
The only way to remedy this situation is for the lender to make a motion to the bankruptcy court for an order for Stay of Discharge, which if granted, will take away the discharge protection you have now and the lender can then proceed against you as per normal. I think the main reason that the lender has not as yet moved for such an order is that you have continued to make the payments on the loan and they see no reason to come and ask for the house.
What you can do to move matters along and enable negotiations between you and the lender, is to contact the bankruptcy trustee who handled your petition and say that you would like to reaffirm your debt with this particular lender. But be very careful as this could turn out to be a double edged sword.
You see, as things are at the moment, the lender is content to keep receiving the payments and cannot alter the loan in any way, shape or form. But if the loan is reaffirmed, they may very well take some drastic measures like recalling the loan, raising the interest rates, or some other adversarial and retaliatory action. Then again, they may not; you just need to make a very informed decision.
fredrikklaw
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