Questions about Mortgages & Chapter 7 Bankruptcy In New York

Why Was My Mortgage Included in My New York Bankruptcy Case?

All debts MUST be listed in a bankruptcy case. That is the intent if not the specific language of the Bankruptcy Abuse and Consumer Protection Act of 2005. Therefore, to use the vernacular, your mortgage “was included in the bankruptcy.”

I Need to Reaffirm My Mortgage in NY, How Do I Do That?

In certain parts of the Country is it ok to “reaffirm” a mortgage. In those parts of the country, the state in which the case is filed does not allow the lender to hold you responsible for the balance of the mortgage still owed in the unanticipated event that you are not able to make all of the payments after filing for bankruptcy.

New York is not one of those states.

This issue has been extensively considered by the Courts in this part of the country. In Connecticut, the Bankruptcy Court held as recently as 2008:

“Code § § 521(a)(6) and 362(h) abrogated the ride-through option as it pertains to personal property. However, courts have concluded that the ability of a debtor to choose the ride-through option as it relates to real property was not abrogated by BAPCPA. See In re Wilson, 372 B.R. 816, 820 (Bankr.D.S.C.2007) (“[T]he Court finds that … controlling precedent in the Fourth Circuit … provides for a `ride through’ option for real property that was unaffected by the BAPCPA amendments.”); In re Bennett, No. 06-80241, 2006 WL 1540842, at *1 (Bankr. M.D.N.C. May 26, 2006) (“[T]he court finds that *402 debtors … continue to have the right … to retain real property without being required to reaffirm or redeem, so long as payments to the creditor are current.”).

. . . . Accordingly, this court must conclude that when Congress eliminated the ride-through option for personal property in BAPCPA, Congress was aware that there was a ride through option for real property and intended to leave it intact post-BAPCPA. Consequently, the court agrees with the Bennett and the Wilson courts and concludes that debtors are permitted to take advantage of the ride through option with respect to relevant real property. As a result, the court also must find and/or conclude that the Reaffirmation Agreements are not in the Debtor’s best interest and must be disapproved.”

In re Caraballo, 368 B.R. 398 (D Conn. 2008)

I Can’t Get a Loan Modification Because My Lender Stated That I Did Not Reaffirm My Mortgage?

That is not true.

“Borrowers who have received a Chapter 7 bankruptcy discharge in a case involving the first lien mortgage who did not reaffirm the mortgage debt under applicable law are eligible for HAMP.”

The Making Home Affordable Program: Handbook for Servicers of Non-GSE Mortgages , pg 79 ( Version. 4.4,  Mar. 3, 2014).

My Credit Report Does Not Show My Current Payments on My Mortgage, What Do I Do?

Just follow these steps.

1. Request a payment history from the mortgage company. (The mortgage company is required by law to provide one every year free of charge.)
2. File a dispute with the three credit bureaus, attaching a copy of the payment history.
3. The credit bureau is required to verify the accuracy of the debt with the mortgage company within 30 days.
4. At that point, the mortgage lenders can either:
   1. Remain silent and then the credit bureau must accept the information provided by you; or
   2. Accurately report information. The mortgage company would be hard-pressed to explain how the payment history it sent you is not accurate.
5. You may need to repeat this process on a regular basis, to update the information.
6. Finally, keep the payment history, since that can be provided to anyone you are applying to for new credit.

If you need more information or expert legal advice, please contact our Chapter 7 Bankruptcy Attorneys in New York at Michael H. Schwartz, P.C. for a consultation by giving us a call or contacting us through our website.