Legal Question in Banking Law in Wisconsin

Unfortunately, the recorded real estate mortgage portion of your loan does still exist, even if the balloon payment date is past on the underlying promissory note and has not been refinanced by your credit union. You are therefore very lucky that they are still accepting payments and have not restarted the foreclosure. For newer mortgages, it is completely normal for most of your payments to be applied to interest rather than principle, which will become clear to you if you run an amortization table on your loan (available free on the web--just search mortgage amortization table). Although bankruptcy can slow down a foreclosure, or, in the case of a chapter 13, totally reinstate the loan, it would never give you any different loan than what you had before the bankruptcy---any balloon due dates for payment in full remain. Under current federal law, with the exception of curing a default, chapter 13 cases cannot otherwise alter owner occupied residential homestead first mortgages at all, although it is sometimes possible to remove 2nd, 3rd or other junior mortgages in chapter 13 via a separate federal lawsuit called an adversary proceeding. (There has been talk about changing this�which would have prevented our recent real estate crisis and recession, but so far only talk) In Wisconsin, reaffirmations in residential first mortgages are more or less irrelevant to anything except credit bureau reporting and do not effect that creditors� rights to foreclose against you if you again go into default later, and failure to pay a balloon loan in full on the due date is indeed a default. The only legal effect of a reaffirmation here is that it preserves the ability of the bank to garnishee your wages for any deficiency judgment remaining after a foreclosure, something which almost never happens even without a reaffirmation. Therefore, in my opinion, they are nothing more than a waste of paper, unless you soon plan to apply for refinancing, when they can have very slight desirable effect upon credit worthiness due to some silly eccentricities of credit bureau policy which have little or no basis in law. Obviously, you need to schedule an appointment ASAP with your bankruptcy lawyer, or find a new one if that will not work for you. Please be aware that my responses to you in the public web forum do not make me your attorney and that I am not representing you or taking any action on your case. Instead, these answers are intended for public educational use only and may also contain lawyer advertising materials. Regardless of this, however, you are still welcome to contact me during business hours at my in Racine if you still have questions, or see me on the web at www.jayknixonlaw.com. For a list of my other answers on Law Guru, please see my profile link here at lawguru.com.