Posted on: 14th Sep, 2009 09:06 am
Two years ago, my husband and I found ourselves in the unfortunate circumstance of needing to file a Chapter 7. At the time, we owned two homes, both rental properties. We also had a truck loan, car loan, and a couple of credit cards. We had an unblemished credit history, no lates, and our scores were just shy of 800. Why was the bankruptcy needed? Because our second property proved to be quite difficult in obtaining rents. After three evictions on that property (and an eviction on our resident rental property), we fell severely behind in the mortgage on the second property. As a matter of fact, we kept our heads above water for quite some time while we tried to sell the property, but to no avail. In the end, we had to let the property go. To avoid a foreclosure lien on the property we live in and own, we filed the chapter 7.
We must have stated umpteen times to the attorney that our intent was solely to be rid of all of the debt associated with the second property. We wanted to keep our truck and car loans and our primary residency mortgage.
Nobody once ever mentioned to us that we would actually need to reaffirm those loans. We didn't find out about reaffirmation until just recently when we applied for a car loan and were declined and took the decline as an opportunity to take a close look at our credit files.
Much to our surprise, the car loan we had just paid off this past year and the mortgage that we have been paying faithfully were charged off. No payment history shows.
Come to find out, the car loan will fall off our credit file in a few years, no big deal. But the mortgage...that will report as a negative account, charged off, until the loan is paid off, plus ten years to fall off our file. That's 35 years from now!
Needless to say, we're livid. I contacted the attorney's office that handled our bankruptcy and the specific attorney is no longer there. They're telling me that they NEVER offer reaffirmation because it's not in the best interest of their clients.
How is it in our best interest to have a serious negative account on our file for, basically, the rest of our lives?
I need to know what legal recourse I have. I've been calling local attorneys and nobody handles legal malpractice. Nobody who has bankruptcy experience in anycase. The one attorney that I spoke with who has knowledge in both informed me he was of the opinion that the attorney did us a favor. Because, "We can walk away from the house and nobody can come after us." Um, ok...and where should we go? We can't buy another house....and with our four children ages 3 and under, who will rent to us? We couldn't afford to rent a place big enough...that's why we own a multifamily, so that our renters' payments help with the mortgage.
Any suggestions?
We must have stated umpteen times to the attorney that our intent was solely to be rid of all of the debt associated with the second property. We wanted to keep our truck and car loans and our primary residency mortgage.
Nobody once ever mentioned to us that we would actually need to reaffirm those loans. We didn't find out about reaffirmation until just recently when we applied for a car loan and were declined and took the decline as an opportunity to take a close look at our credit files.
Much to our surprise, the car loan we had just paid off this past year and the mortgage that we have been paying faithfully were charged off. No payment history shows.
Come to find out, the car loan will fall off our credit file in a few years, no big deal. But the mortgage...that will report as a negative account, charged off, until the loan is paid off, plus ten years to fall off our file. That's 35 years from now!
Needless to say, we're livid. I contacted the attorney's office that handled our bankruptcy and the specific attorney is no longer there. They're telling me that they NEVER offer reaffirmation because it's not in the best interest of their clients.
How is it in our best interest to have a serious negative account on our file for, basically, the rest of our lives?
I need to know what legal recourse I have. I've been calling local attorneys and nobody handles legal malpractice. Nobody who has bankruptcy experience in anycase. The one attorney that I spoke with who has knowledge in both informed me he was of the opinion that the attorney did us a favor. Because, "We can walk away from the house and nobody can come after us." Um, ok...and where should we go? We can't buy another house....and with our four children ages 3 and under, who will rent to us? We couldn't afford to rent a place big enough...that's why we own a multifamily, so that our renters' payments help with the mortgage.
Any suggestions?
may be this will help
http://www.mortgagefit.com/bankruptcy/discharge-reaffirmloan.html
http://www.mortgagefit.com/bankruptcy/discharge-reaffirmloan.html
You're in a tough situation. It would have been better if you could have reaffirmed the loan and paid it off. The creditor would have reported the payments to the credit bureau which would have helped in improving your credit score. The one thing that you can do not is that you can re-open your bankruptcy filing and reaffirm the loan. Thus, you will become personally liable for the loan payments and the lender will report the payments to the bureau.