Question Details: I filed for bankruptcy last year. The bankruptcy has been approved and closed. I did not include my house or my car in the bankruptcy. Now I am trying to renegotiate my mortgage. The mortgage company is asking for a reaffirmation from my lawyer. My lawyer never told me about a reaffirmation letter. Now he want's me to pay him 500.00 to reopen the bankruptcy to file this reaffirmation on the house. Was this suppose to be included in the origional bankruptcy?
A bankruptcy need not include a mortgage re-affirmation. Some attorneys don't have their clients re-affirm because it entails having the borrower remain personally liable on the mortgage note. This means that down the line, after the discharge, in the event that the property goes into foreclosure the borrower can be held responsible for any "deficiency judgement" that may arise; that is, they will be obligated to pay the difference between the sale price of the property and what is still owed on the mortgage, plus costs. If the mortgage is not re-affirmed the borrower can no longer be held liable for such a judgement.
However, if a mortgage is re-affirmed, because the borrower remains personally liable on the note, all mortgage payments continue to be reported on the borrower's credit report thus helping to re-establish credit. Additionally, if the mortgage is re-affirmed, a mortgage modification may be allowed (as in your case).
Bottom line, not having your mortgage re-affirmed is not necessarily right or wrong; but not explaining your options and having you decide is questionable practice. At this point, sit down with your attorney and ask why none of this was ever presented to you. Possibly it was, and you just forgot.

Are you a lawyer?
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