Legal Question in Bankruptcy in New Jersey
I was discharged from my chapter 7 bankruptcy after my divorce in Sept. 08. Before the discharge, I sent a reaffirmation agreement on 4 of my debts, including a first and second mortgage. In Jan.09, I was still having trouble paying my 2nd mortgage online and I called the company and they said they never got my reaffirmation agreement and needed me to reopen the bankruptcy in order to let me continue paying. I thought that was stupid and stopped paying and never heard from them again. As far as they were concerned, the debt was discharged and they won't accept payment without me going back to reopen the bankruptcy. I am sure they still have a lien on the property. This past month, my 1st mortgage company was swallowed up by their parent company and now the 1st mortgage is in the hands of another company. I was locked out of the web site after making payments for the mortgage until July 09. When I called the new company, they said I had never reaffirmed the debt (not true) and they cannot accept payment unless I reopen the bankruptcy. They said the debt was discharged and they maintain property rights. One week after the phone call I received a letter that they intend to foreclose on the property on Oct 1, 2009. To complicate the mess, I lost my job last month and there will be no way to reaffirm the debt even if I went back to court to reopen this thing. I may be able to find new work in the next 30 days as I have a good prospect of being hired but I don't want to lose my home. I have a wife, 4 children and an aging father living in this home. Questions; is there any statue of limitations after a bankruptcy (7) in which they no longer have the right to ask us to leave the property while maintaining their lien? It has been 1 year this month since the discharge and they have not foreclosed. I made payments for 10 months but now they tell me it all went to interest. I have no equity in the home because of the loss in home value ($120,000 in lost value on a $400,000 home. $308K 1st & $77K second mortgage owed). Next question, if they do foreclose on Oct 1, Can I slow down the process? 3rd question - how long would I have to find another place (with no credit) if they proceed as they say. I want to stay in my current home but I don't want to give them too much info until I have a better financial position to try to negotiate with them. Help?
John
1 Answer from Attorneys
You are receiving a lot of misinformation. Was your bankruptcy handled by an attorney? I am surprised that you reaffirmed both mortgages (or at least you think you did) as this was unnecessary and unwise. Both of your mortgage lenders indicated to you that the debts were not reaffirmed. I speculate that if you did attempt to reaffirm both mortgages, the court did not approve the reaffirmation agreements, and that this simply never came to your attention. The court typically does not approve such reaffirmation agreements because they are so unwise and unnecessary.
I do not understand why you stopped paying your second mortgage. If you could not pay online, you should have simply sent a check each month. The same goes for your first mortgage when you were recently locked out of the web site. I believe that what your lenders intended to say was that you no longer had the privilege of accessing your account online due to the lack of a reaffirmation agreement, not that you no longer had the ability to make payments at all.
It is not surprising that you received a pre-foreclosure letter if you haven't been making payments (again, they should have been sent by check if you could not make them online).
A foreclosure takes a long time for a lender to complete. Since you have not yet been served with a foreclosure complaint, you are in no immediate jeopardy of being removed from the home. I suggest that you contact an attorney immediately to discuss ways to resolve your situation. I handle matters like yours everyday. Feel free to call me for assistance.
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