Ch. 7 Bankruptcy with a reaffirmation/loan modification

[mnhomeowner]

Hello all! I would like to send a big thanks to loansafe for this website..what great information you provide! I would like to get some feedback on my situation if possible.

I filled for Ch. 7 bankruptcy in August and had my court date on Oct. 2nd (2008). I have been calling in my monthly mortgage payments and for my November payment my mortgage company (HSBC) said I was eligible for a loan modification if I reaffirmed the debt. My original loan is an interest only (8.49%) and is set to reset Oct. 2009. On November 12th I talked to a rep with HSBC and the paperwork for the modification was to be overnighted to my attorney. The modification is to have a fixed rate at 5.25%. I contacted my attorney first thing on the 13th to give them the heads up. I contacted the attorney on the 18th and they hadn't received anything so I called HSBC. They apologized and resent the document. Meanwhile I find out that HSBC has a lawyer involved for them. Needless to say my lawyer didn't receive the document until the 4th of December. The problem is my bankruptcy was discharged on the 2nd of December.

I received the paperwork and contacted HSBC and they said that the lawyer needs to file a motion to set aside the discharge. At this point I"m so confused and worried about the outcome of this modification. I contacted my lawyer and he said that he would contact them. After hearing from the attorney he stated that HSBC said I would be able to get the same modification if I wait until January (HSBC would officially have my discharge on file then). As I have become skeptical by now I contacted HSBC and they wouldn't give me any information along those lines.

Finally this evening I contact HSBC bankruptcy department and spoke to a supervisor and he said to sign the papers and have the lawyer file the motion. According to HSBC this is done a lot and there is no problem doing this.

If I could get feedback on if this seems legit to "motion to set aside discharge". I don't want anything to mess up my bankruptcy. I would be able to have the lower payment Jan. 1st as long as the court receives the modification prior to the first. Any feedback I would greatly appreciate it!

Have a good night all!

[Moe Bedard]

Hi mnhomeowner,

Welcome to the forum and thank you for joining..................

If your BK was already discharged a modification isn't going to mess anything up with it..............
as far as the motion goes..............that would be a question for your attorney........if they are saying that this will do at HSBC.......then at least you will have everything in writing...........

[mnhomeowner]

Thank you *** for the reply...it has been a stressful weekend. I will let you know what the attorney says. I have signed the papers and will fax them in the morning! Thanks again ***

[mnhomeowner]

***.....a new situation has arose with my house. My attorney has looked over the paperwork and looking at the current values of the homes in my area (one just sold 2 houses down from me for 86,000) I'm thinking about letting the house go. I have already received my discharge (Dec. 2nd) and want to know what will happen if it forecloses? Will I have a year in the home still? Will I owe any money?

thank you for your time ***!

[Moe Bedard]

You would need to discuss this with the attorney to be sure.

[12345]

MN homeowner! what happened.. i too am a MN homeowner who wants to walk, trying for a short sale but litton and ASC not cooperating

[mnhomeowner]

I have stopped making payments on my mortgage (Jan. first missed payment). I have already found another place to rent. My lawyer (bk) said because I didn't reaffirm the house I have no obligation to the mortgage. So for me it has worked out....my parents however are going to be missing their first payment this month...we'll see what happens to them!

[sadandconfused]

MNhomeowner: when you filed for bankkrupctcy did you include the house or just credit cards and stuff? I too want to file for bankruptcy as fast as I can but I'm afraid what will happen if I foreclose after the bankruptcy. I'm debating if it would make a differenc if I foreclosed first and then filed for bankruptcy. Around how much did they attorney charge you for the whole bankruptcy filing and stuff?

[12345]

hello... i had to file for bk because of the house crisis if you will... be that as it may,, my credit actually rebounded pretty quick.. my middle score is 690 after 3 years.... be sure to include your house in the bk but DO NOT sign any reaffirmation agreements...... i had to let my condo go in to foreclosure this month... i just could not refinance.. could not afford it and per my attorney it wasn't worth saving in the long run.. i didn't plan on staying here for 10 years..... or more... my attorney told me that per the fair credit reporting act, the foreclosure cannot be reported since the loan was already included in BK.... the bank can certainly still post it, but he said he would represent me to get it removed... right now still shows as IIB... my advice though is to hire an attorney... its the best thing i ever did... after fretting over this for almost 3 years...

[12345]

btw you can stay in your house for 6 mos... rent free... save for a rainy day

[sadandconfused]

12345, thats great the credit score went back up so fast congrats. well i already know i don't want to save the house and my second mortgage just sent me my intent to foreclosure letter via certified mail. the first sent it back a few months ago but i went on a payment plan with them. if you foreclose now will the mortgage try to come after you for any of the money even though you put them in the bk? how much did it cost for you?

[12345]

hi, no they are not comeing after me for a defficientcy... its good to get a lawyer... it cost me $250..for less than an hour... but it was well worth it....

[12345]

if the loan is IIB they cannot come after you.... its if you sign a reaffirm during the bk.. then they can..... your lawyer will discuss this with you...

[sadandconfused]

I made an appointment, but I will make another one so I can get 2 opinions. In another thread I started, someone said they paid $2500 or even $4000. When you said you had to let the condo go this month do you mean you just didn't pay or did you move or are planning to work away after they foreclose?

[mnhomeowner]

Sorry for the late response....my attorney fees were right around 1900. I included the house in the BK and didn't reaffirm the house.I haven't made a payment since the first of the year. I moved out March 1st and notified HSBC on the 16th. I went by the old house to check on it this past weekend and they already have the locks changed. Needless to say I won't be returning now that they have control of the house. No notices have been sent in regards to the foreclosure yet. I'm still paying my association dues (so I don't have them coming after me). It has been a pretty stress free way to deal with the debt and the house. If you have further questions let me know and I'll try to respond faster! Good luck in your decision

[sadandconfused]

Did you wipe out all your debts? What about credit cards that didnt have a balance did you keep those? well I figure if they find out that you did a Bk they will eventually close those cards out. How long did the process take from filing to being discharged? I know that if I file now it will stop foreclosure but honestly I don't what or can afford the house anymore so I would have to foreclose anyways.

[mnhomeowner]

I filed in August 2008 and had my 341 on Oct 2nd and was discharged on Dec 2nd, 2008. I included all accounts with balances, and the ones that didn't have a balance ended up closing because of the bankruptcy. I originally was going to keep the house however I'm so happy I am able to get a complete "fresh start". Good luck on your journey..this site was a huge resource for me.

[sadandconfused]

hi thanks for replying. i had 2 phone consultations this afternoon. they both said i should file for bankruptcy as fast as i can before the house goes into foreclosure so i can put the house into the bk. since i'm still living in the house i can put the mortgage as part of the means test. one attorney said around 1800 chapter 7 flat fee, the other one i'm not sure yet until i go for a free face to face consult. I would like to keep the house but i just can't afford it and he said since if i walk away and foreclose, the bank will come after my mom because she is on the deed of trust. i told the settlement company that i didnt want her on the loan. however, she is on the deed of trust. Maybe I just don't understand. The bill comes to my name only. Can someone explain?

[mnhomeowner]

I moved out of my house on March 1st, and within a week HSBC had changed the locks on the house. My question is when will the foreclosure happen? I'm in Minnesota and the house was included in my chapter 7.

Thanks for your help!

[snapple candy]

I just asked a question over on the attorney thread about this "reaffirmation" thing since I dont understand what it is or what implications are. From what I can gather this is not something you want to sign.
I went thru BK 2 yrs ago just before mortgage meltdown went really south. I barely made my payments, then things really tanked. Recently I tried to access on-line account info for my 1st and 2nd at WAMU because someone on a thread mentioned I could get to original loan docs via web site (if they had them). I discovered I could access nothing so I called WAMU on-line services who then transferred me to BK dept. I politely mentioned my BK was discharged 2 years ago, why could I not see on-line info? I was told that because my attorney did not have me sign a reaffirmation. If I did so now, I could again see my on-line account info. I suspect WAMU putting their ducks in a row and trying to get me to sign something obviously my bk attorney wouldnt advise signing.I smell a stench in the air on this one. Maybe I am wrong.

[snapple candy]

Sad and confused,
Did your mother sign anything? I am assuming so if she is on the deed of trust.It is good you are getting 2nd and 3rd opinion although I suspect 1st attorney giving you true impact to your mother.Sorry I cant answer that question.

I would agree, file BK to stop foreclosure process to protect you and your mother from further losses. It can done as late as day before. It freezes everything and you are under protection of the automatic stay. $1200-$1800 is the going rate for attorneys to do BK.

[sadandconfused]

yes they said if they eventually came after my mother with a deficiency she would have to file for bk as well. we have a 3 year statute of limitations..

[efecik17]

Can someone answer what happens after filing Chapter 7? I'm in foreclsoure, filed BK, have a court date in a week. Live in FL, do I have to move out of the house right after?

[Moe Bedard]

that would be a question for your attorney.

[kshannondc1]

Originally Posted by sadandconfused

hi thanks for replying. i had 2 phone consultations this afternoon. they both said i should file for bankruptcy as fast as i can before the house goes into foreclosure so i can put the house into the bk. since i'm still living in the house i can put the mortgage as part of the means test. one attorney said around 1800 chapter 7 flat fee, the other one i'm not sure yet until i go for a free face to face consult. I would like to keep the house but i just can't afford it and he said since if i walk away and foreclose, the bank will come after my mom because she is on the deed of trust. i told the settlement company that i didnt want her on the loan. however, she is on the deed of trust. Maybe I just don't understand. The bill comes to my name only. Can someone explain?

OMG! You just mentioned something that I never thought about! When the closing agent came to our house for our loan, he made me sign the deed. I am not on the loan and initially told him that I didn't want any liability but the agent told me it was state law in MD that the spouse has to sign the deed to protect themselves from spouses trying to sell assets without the knowledge of the other. We are in the same boat as you. What did you find out in regards to your mother?
So, is it true that if you file BK before forclosure, the forclosure does not appear on your credit?
How did you handle things? Were you able to stay in your home while waiting for bankruptcy?
Sorry for all the questions, but I am terrified!