Does a loan modification after a Chapter 7 reaffirm the loan?

Get Legal Help Today

 Secured with SHA-256 Encryption

Does a loan modification after a Chapter 7 reaffirm the loan?

I filed a Chapter 7 bankruptcy 2 years ago. This included my 1st and 2nd mortgage and they were not reaffirmed. I worked out a loan modification with my lender on the 1st so we could stay in the home. They are now trying to foreclose on the 2nd, which we haven’t paid in2 years. So, if we decided to just walk away, can the bank come after us for modifying our 1st? I checked my credit report and the bank has not been reporting for 1 1/2 years and they both say $0 (discharged in bankruptcy).

Asked on August 1, 2012 under Bankruptcy Law, Washington

Answers:

Terence Fenelon / Law Offices of Terence Fenelon

Answered 8 years ago | Contributor

 Very Interesting question which I have never encountered.  Let't see if we can break it down?

The 2nd mortgage, which you never reaffirmed, is filing a foreclosure.  Is the company the same as the first?  if not, then the debt is discharged and the bankruptcy discharge would be a defense in the civil foreclosure suit.  Tou should get an attorney to properly present the defense to the Court.

The first mortgage, however, may be treated differently.  The modification was entered into AFTER the discharge.  Thus, a new contract, post petition, arises and you may have a liablility for a deficiency which arises.  If the 1st and 2nd mortgage holders are identical, look to the terms of the modification agreement to determine if you have cross-coolateralized the rights of the mortgage holder to proceed against either of the secured liens.


GOOD LUCK


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption