Mortgage Reaffirmation and Bankruptcy

Mortgage companies will attempt to have a debtor sign a reaffirmation agreement during a Chapter 7 Bankruptcy case.

Most of the time, it is not advisable to sign a Mortgage Reaffirmation agreement.

Think about it. When a debtor files a Chapter 7 bankruptcy, all of his/her debt is discharged. Why would you want to “guarantee” that you are liable on a mortgage debt after bankruptcy. It completely defeats the whole purpose in filing bankruptcy in the first place. A debtor files bankruptcy to “discharge” debt.

In a Chapter 7 bankruptcy, a debtor can surrender the home and walk away without any debt or continue to live in the home and pay the mortgage, insurance and taxes.

Does a debtor have to reaffirm the mortgage note and sign a binding contract making him/her personally liable on the mortgage note post bankruptcy.

The answer to that question is emphatically “NO.” Unfortunately, I imagine a lot of debtors sign reaffirmation documents not realizing the serious consequences of a reaffirmation agreement.

Word to the wise. If it the document came from a bank, read it twice, show it to a trusted friend and consult an attorney if you can afford it. Do not simply sign it and return it to the bank.

Dunne Law Offices, P.C.

1500 John F Kennedy Boulevard Suite #200

Philadelphia, PA 19102

(215) 854-6342 (Office)