Expert: Terry Leeders - 10/26/2008

Question
I am in an active Chpt 13 Bkrpty and we have a 1st & a 2nd mortgage we did not reaffirm either mortgage and now the 1st mortgage Co IndyMac is feeing like crazy & is harrassing us to sign a reaffirmation aggreement or they want to forclose they are asking for "Relief from my Chapt 13 Stay" becaused they say their interest in our property isnt protected without a reaffirmation aggreement. If we allow them to have our house & leave will we be financially responsible for the balance of the either mortgages?? Thanks

Answer
First off, you do not reaffirm debts in chapter 13, only in chapter 7.
IF you are in a 13, then stay current on the payments and there is no issue.
It sounds like you are doing ch7, and not ch13 which is a 3-5 yr repayment plan.
If you do not sign the reaffirmation agreements, then the lender can foreclose on their interest in the property.  If you do not sign them, then the debts are discharged in the case, and you can walk away free and clear.  Sometimes the lender will let you keep the asset without reaffirming, but you need to stay absolutely current.