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Bankruptcy Law/Which is better in your opinion?


My residence will be foreclosed by the lender in two months. Three years ago My residence was discharged  in chapter 7 after which we kept the property and then continued making  the monthly payments .In the "Statement of Intention" page,  My  Bankruptcy Attorney, at the time , said I had to  check the box where I state that I was affirming the debt , and then I had to sign the Statement of Intention at  at the bottom of the page, which I did.

i asked him why  I had to do this , since the purpose of my filing Chapt. 7 was to remove my debt obligation. Then  he said that because I wasn't surrendering the property I had to do it.

But he said that I won't be personally liable for the debt.   However, II NEVER signed any reaffirmation agreement .

 Am I  still protected from liability  by my Chapter 7 discharge ?

Short version:  Yes you're protected.  The statement of intention is a toothless tiger -- if you don't perform within 30 days the lender is free to foreclose -- but they also have that right once your discharge is entered.  As you see, if you keep the mortgage payments current, they leave you alone.

My preference on the intention statement is to check the box "other" on real estate and state that it will be "retained with continuing monthly payments".

Atty is correct -- you are not now (and most likely never were) personally liable on this debt for two reasons -- Calif has an anti-deficiency law that would protect you and secondly, whatever liability you did have would have been discharged in your 7.

Keep in mind that when you don't reaffirm a debt, like real estate (and we never do) then the creditor won't report your payment history to the credit agencies -- however in this case with the delinquency and pending foreclosure, that's probably a good thing in your case.

I hope that helps.  Feel free to follow up with any other questions.

PS:  I suggest moving most but not all of your property out of the house when you get near the trustee's sale date -- after the sale contact the foreclosing trustee and tell them you want to get "cash for keys";  some lenders will pay you up to $3,000 cash if you promise to leave the place peacefully, in broom clean condition, and not damaged.It's a good idea to "still be moving" when you have this discussion and when you meet the trustee's representative at the home to inspect.

  Normally they'll make that deal with you, you move everything else out by a date certain, and you get a check about 3 weeks later.  They will NOT volunteer this information; you have to ask;  and not all lenders do it, but ask anyway!  

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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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