Expert: Terry Leeders - 6/24/2009

Question
FYI we did a ch 7 in IL and just had our 341 mtg a week ago.
We have listed on the bk paperwork that we would reaffirm the house and our van. We listed the computer, washer/dryer, and tv as redeem and a money value is placed next to them. They are all about 18mths old. (They are secured debt from a store cc-- Best Buy, Home Depot, Sears.)

I do not understand this process even though I did ask our atty after the 341 mtg but I still don't get it and he was in a hurry to leave.

*Before* the 341 mtg we got from our atty paperwork to reaffirm the van from Wells Fargo and *much* to our surprise (and without us asking!) they lowered the interest rate and mthly payment amount and balance due! We were shocked and happy of course because even with the bk we will be scrapping by. So far we have not heard anything from the house. We are current on our payments. We are hoping they would do like Wells Fargo did since we are upside down on the house by $15K. When will we hear from them, do they have to send us something before our 60 days are up? Or can they choose not send us anything and we will "ride through" and just be able to stay in the house as long as we pay?

Also, inregards to the secured debt (computer,washer/dryer, tv). We want to keep them only because we have no money to go and by another if they are taken back and we absolutely have to have a washer/dryer in the house with several kids and can't do the laundermat. We only have the one tv and computer too so we would be without any. Early in the bk process when we met with the atty he asked us what they were worth. My husband guessed having no idea if it is really accurate. Now we find out on the bk paperwork the value he told the atty is listed as the price we would redeem the stuff for. So does the stores (BB, Sears, HD) see this price and of course will jump at taking the money for the stuff? Or was this part of the bk paperwork for the atty right now and we get to wait until *they* offer us something first? Right now we can not imagine how we will come up with $1000 to redeem those things and we only have 30 days to pay for them. Since we have not heard from them *before* the 341 does that mean they are not going to take any action and just let the products go? Or again do they have until the 60 days is up to tell us to pay for them? Thanks in advance for your help!

Answer
Good news on the car.  For other secured debts, like appliances, furniture jewelry etc. the attorney can usually negotiate a better reaffirmation balance, payment interest etc.   if you want to redeem them, paying them off in lump sum for the fair market value, you can do that to by motion with the court.

Mortgages, however, do not negotiate, so go ahead and request a reaffirmation.  You can then talk to them about a possible loan modification that they might be willing to offer.