Skip to main content

Does a loan modification after Chapter 7 reaffirm the loan?

Seattle, WA |

I filed for Ch.7 BK in 2010, I didn't reaffirm my mortgage but later worked out a modification with the bank on my 1st. They are now going to foreclose on the house for the 2nd which was discharged in BK. According to them since we modified the 1st it open up the 2nd. My question is, if we decided to walk away can the bank come after us for anything? I understand Washington State is a "non-recourse' state. Did the modification reaffirm the debt?

Thank you.

+ Read More

Attorney answers 3

Best Answer
Posted

A mortgage is not reaffirmed in bankruptcy unless the bankruptcy judge signs off on it with a reaffirmation. Even if you had signed a reaffirmation, unless the bankruptcy judge okayed it, it is not a valid reaffirmation. The careful bankruptcy judge would not be likely to allow you to reaffirm because the circumstance you describe is, in fact, all too common in bankruptcy.

Hope this perspective helps!

Asker

Posted

It does help and thank you. So BofA can't reaffirm the mortgage without a BK Judge, that is good to know. I just want to make sure that the modification with BofA didn't reaffirm the debt. Thanks again.

Posted

I recommend you consult with a bankruptcy attorney. Jason Anderson is a good one. (206) 706-2882.

[In accordance with the Avvo community guidelines, this communication does not constitute "legal advice", nor does it form an attorney-client relationship.]

Posted

You should have the modification agreement reviewed by an attorney. Was the modification a HAMP modification? If so, HAMP prohibits reaffirmation. And, modification of a first mortgage should not have any affect on the second mortgage. If you signed refinance documents, you would create new, post-bankrutpcy liability for yourself. But it does not sound like you did that so the bank is probably wrong and bullying you for payment. You may also want to look into whether you can strip off the second mortgage in a Chapter 13.

Asker

Posted

Thank you for the response. It was not a HAMP mod, I dealt directly with BofA. From what I understand, I have to wait 5 years to file for Chapter 13 after a 7, is that correct? My thought all along was that BofA is trying to bully us into paying. I'm not sure they have any ground regarding the 2nd.