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Bankruptcy Law/Reaffirmation

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Expert: - 4/17/2010


Question
Thank you for the opportunity to discuss my question.
I was discharged from chapter 7, did not reaffirm either first or second mortgage. Of course my house is upside down, thinking of moving. I was offered a loan modification with GMAC on first, I do not want to reaffirm this debt so by doing the loan modification I was told to complete this process I would need to reaffirm the debt after the trial period, is this true?
Thanks for your help.

Answer

Leon Bayer
Legally speaking, that is not true, and it is also too late, because a reaffirmation MUST be filed with the court within 60 after your Meeting of Creditors, and prior to any discharge. Obviously, that is not going to happen here because you already have a discharge.

The modification of a loan is strictly at the option of the lender. Thus, they can pretty much make up almost any rules they want to. However, if they have decided that they will not modify a loan without a reaffirmation, there is nothing you can do about unless you can change their mind. After all, you did not know what they wanted until after it was too LATE to meet the requirement!

I would tell them if they want the house, they can have it! But if they want to modify the loan, then they will need to bend their rule and do it without a reaffirmation, since that is now a legal impossibility.

I hope this works out well for you, however you decide.  

Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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