Should you reaffirm secured debt after bankruptcy?

Answer 1

I'm not an attorney. But,let me share this experience. I filed for Chapter 7 due to illness and wasn't very mentally intact during the bankruptcy process. However, I wanted to reaffirm my 1st and 2nd mortgage. My attorney had me sign a reaffirmation for the 2nd mortgage without signing one for the 1st mortgage. I didn't realize what happened until after the bankruptcy was discharged. The mortgage company would not reaffirm the 1st mortgage after the bankruptcy. So, I couldn't just surrender my home anymore without having the liability of having to pay off the 2nd mortgage. Then the housing market tanked. But, I'm fortunate in that my home mortgage is reasonable. But, this could have been a catastrophe for someone else.

I think that one usually reaffirms their mortgage before the bankruptcy is dishcarged. What ever you do, don't sign one mortgage without signing the other. Tell your attorney to have both reaffirmatioin agreements sitting in front of you at the same time. You better discuss this with your attorney.

In todays housing market, I can see where it is more beneficial not to sign a reaffirmation of your mortgage; especially, if you have no equity or you're upside down in your mortgage.

Good luck.