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After a Chapter 7 bankruptcy, do I need to reaffirm a mortgage in order to re-finance? It is over 2 years since my discharge.

Denver, CO |

My wife was not part of the bankruptcy but is on the mortgage. The mortgage was always kept current.

Attorney Answers 4

Posted

Under the bankruptcy code, reaffirmation of a debt secured by real property is not required. A reaffirmation must be filed with the court before discharge to be enforceable.

The mortgage lien on the home survives the bankruptcy, but the mortgage loan is discharged for the debtor, but not any non-filing co-debtor. If the mortgage payments are kept current, the mortgage company cannot foreclose on the property just because of the bankruptcy.

Some debtors reaffirm mortgages for credit report reasons, but that benefit may be outweighed by the risk of putting oneself "back on the hook" for a debt that is dischargeable.

A lender whose mortgage has been discharged in bankruptcy may not want to refinance the mortgage to avoid violating the discharge order. But if a debtor is otherwise qualified, there is no restriction on refinancing with someone else.

With what's at stake, consulting with an experienced bankruptcy attorney licensed to practice in your state may be a good idea.

If you want to know more about the meaning of certain key words used in bankruptcy, see the federal courts' web site for a glossary of bankruptcy terms: http://www.uscourts.gov/Common/Glossary.aspx.

My law firm is a federally designated debt relief agency and helps people in Colorado file for bankruptcy relief under chapters 7 and 13 of the Bankruptcy Code.

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Posted

No such thing. The reaffirmation agreement had to be prepared by the mortgage bank, signed by you, by your attorney AND approved by the BK judge BEFORE the BK was closed. Sorry.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.

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Posted

Ordinarily, reaffirmation is something you do while you are in bankruptcy. If your case has been closed for two years, there is no need to "reaffirm". Refinancing is a totally separate process from "reaffirming" in bankruptcy.
Check with your lender or another lender in your area about the ability to finance your loan with them.

This answer is for informational purposes only and may not be relied upon as legal advice.

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Posted

Lenders may want to see your account history with the current mortgage, and this information won't show up on your credit report because of your bankruptcy. Solving this issue isn't a problem - just ask the current lender for an account history showing your payment records. BTW, if you are looking at refinancing to get a lower interest rate, why not talk to your current lender? They may be willing to grant you a permanent modification at a very attractive rate and they already know your payment history. Hope this perspective helps!

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