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Should I Reaffirm My Mortgage in Bankruptcy

Posted on Jul 9, 2010 in Mortgage Modifications

You are in bankruptcy and you want to keep your home.  You have struggled to pay your mortgage and can keep paying it if you just get rid of your credit card and other unsecured debts. So you decide that you need to file a chapter 7 bankruptcy case.  Your lawyer asks “what is your intention” about your mortgage loan ?  Do you intend to reaffirm or surrender?

These are not your only options. In contrast to the situation regarding an auto loan, where you could actually have the car repossessed if you don’t reaffirm, you could keep paying your home mortgage loan without losing your house.

Why might you want to reaffirm – contractually agree to personal liability – for a home mortgage loan even though your personal obligation to pay would otherwise be discharged in bankruptcy?

I recently asked that question to a lender who wants our client to reaffirm.   This is what the lendeer said:

The following could possibly be available to the Debtor should they qualify for a rate modification.

* Credit bureau reporting restored

* Online access restored

* Loan may be brought current*

* Option to apply for a rate mod reducing rate

* Will receive billing statements

So the answer is clear.  Don’t reaffirm unless you are getting something back which you think is of value to you, like a loan modification or other good consideration. 

For real debt relief in bankruptcy and beyond in Illinois or Wisconsin, call Lakelaw at 1 866 LAKELAW (525-3529) today.


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