Bankruptcy Law/Chap 7


We are in California. I had my debts discharged in Chap 7 last May.  In the "Statement of Intention"  section,  I told my attorney to mark that I was keeping my main house loan.  

But at the same time he marked "retain", he also marked "reaffirm" on the Statement of Intention.  I told him that I had heard from the grapevines, to never  "reaffirm" a loan. But he said I had to do it.

I had my chap 7 discharged last year.  I told my attorney that I was retaining the property, and he marked retained on the "Statement of Intention"..  But at the same time he indicated "affirm"  for the loan.  I told him that affirm is wrong, as I had heard from people to never affirm the loan in bankruptcy.
He said that I need not worry, as I would have no personal liability for the loan . Only thing the bank can do is use the lien to take the property, if I fall to far behind in payments.

Finally,  I told him that I would not  sign the  actual Bank Reaffirmation agreement for the loan,-if he ever got got it from the bank .  Well, God is Great because The Bank's reaffirmation was never came to him, so I never signed it.  Is it true I am not personally responsible for the loan?

By not signing the actual reaffirmation agreement for the loan,  is it true that I have no personal liability?

After all, I believe the purpose of bankruptcy is discharge my debts, and to get a fresh start.

In California you likely have no liability for the debt to begin with;  signing a reaffirmation "just because" on real estate is never a good idea unless you get something substantial (principal or interest rate reductions maybe?);  this is really a non-issue as the bank can't do anything to you personally now and probably couldn't before either;  I'm assuming this is a first mortgage;  if it's a second all the more reason not to reaffirm as your personal liability on that would be discharged and reaffirming would revive your liability if the first foreclosed the second.

I'm not sure why you were told you had to reaffirm the real estate debt but I respectfully disagree with that advice.  We check "retain" and "other--continue to make payments" in our r.e. statements of intention in CA and AZ and have never had a problem.  Good luck!

Lee Horner

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Consumer bankruptcy questions invited. I've been filing Chapter 7, 11 and 13 cases since 1985 in Calif and Arizona. I do NOT do homework questions. Let me know what state you're located in when you write. My bankruptcy practice is limited to California and Arizona but inquiries from other states are welcome. Your local jurisdiction determines exemptions. Find more background information at our website, Individual Chapter 11 and small business chapter 11 questions invited. We can also advise on the creditor's side if for example you have a fraud case, money judgment etc against someone who has filed (or is threatening) bankruptcy. We have filed and defended numerous adversary complaints in bankruptcy court and opposed trustees' demands for turnover of assets from time to time.


My partners and I have filed over 5000 consumer and small business cases to date in California and Arizona.

I've been a member of the California bar since 1984 and Arizona since 2004; also a member of the National Association of Consumer Bankruptcy Attorneys, Bankruptcy section of the Arizona State Bar, Tucson Association of Consumer Bankruptcy Attorneys, Arizona Consumer Bankruptcy Counsel and American Hellenic Educational and Progressive Association (AHEPA).

I've written a booklet on land trusts for real estate owners, players and dealers, and co-authored a special edition of "Stop Sitting on Your Assets". I was a writer of a monthly law review article relating to California real estate issues and pending and recently enacted legislation.

Attorney at law, experienced in trial procedures, adversary complaints filed and defended and numerous claims objection proceedings as well as filing cases for consumer and small business debtors.

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