Expert: Mark J. Markus- California Bankruptcy Attorney - 7/12/2010

Question
First, thank you for your time. We filed and have been discharged from CH7 since mid April. We signed a Reaffirmation to keep our house on the first and second loans we have which were accepted in February. We contacted our 2nd to get the amount we were behind and were told the balloon note is due in two months and they want it all now in full and will not take payments to get us caught up on our behind payments. They have now filed a law suit for said money. Question 1) Can we reopen and file our 2nd due to them not letting us catch up on our behind payments? Also, our first is willing to work with us but after we received the law suit we moved out thinking a foreclosure was to follow, can we file on the first as well?
Next, our lawyer told us if we could not get the bank to work with us, he could reopen the case for an extra $1000.00 and include the reaffirmed debt, this was our reason for signing the reaffirmation agreements. However, he now says we are not allowed to reopen because we signed the reaffirmation agreements. As stated, we only signed because the way it was explained to us meant if we tried to keep the house and it did not work, no problem, just reopen and file. I believe this was bad advice, can he be liable for the amounts if the Court will not reopen and accept this debt?  We live in Georgia.

Answer
Reaffirming debts on real estate is almost never advisable (in fact, I've never seen a case where it was).  

In any event, if you in fact reaffirmed the debts on your first and second mortgage (meaning they were signed and filed with the court prior to discharge and, if not signed by your attorney, approved by the bankruptcy judge), then the only way you can back out of them is to rescind them.

The deadline for rescinding a reaffirmation agreement is 60 days after the agreement is filed with the court.  So, if you filed your reaffirmations in February, you can no longer rescind them.  The debts were taken out of the bankruptcy and you now owe them as if you did not file bankruptcy.  There is nothing you can do from a bankruptcy perspective to deal with those debts at this time and you can't file another Chapter 7 case for 8 years (you can possibly file a Chapter 13 case in 4 years).  

http://www.bklaw.com/