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What is a Reaffirmation Agreement in a Bankruptcy?

Many times when a person files a Bankruptcy, the bank will send him or his attorney a document called a “reaffirmation agreement.” With this, the bank is asking him to reaffirm the mortgage debt if he wants keep his home.  Many times the reaffirmation agreement will include better mortgage terms than the original note—this is done by the bank to induce your agreement.

Under the law, when one is in a bankruptcy, he is not required to reaffirm this debt or any other, but it is another option for him to keep his home. One should file the signed reaffirmation agreement with the court prior to the discharge, or within 60 days after the 341 creditor’s meeting. If one reaffirm’s his mortgage note and then goes into default because he cannot afford to make the payments, he will be liable for the note even though he had filed a Chapter 7 Bankruptcy.

There are instances when mediation is better for a homeowner than signing a reaffirmation with the bank (see below, for discussion on mediation).  For example, sometimes a person can discharge his mortgage note in a bankruptcy and then continue on to mediate the terms of his monthly payment, even though he may not liable for the note if he defaults; whereas, if a person signs a reaffirmation agreement, he will still be liable for the mortgage note if he later defaults.

Summary

When a homeowner is in bankruptcy, he may sign a reaffirmation agreement; many times, the terms in the reaffirmation agreement will be better than the original note.  There are instances when it is better for a homeowner to mediate his mortgage terms in court than to sign a reaffirmation with the bank in bankruptcy.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

Can I Disharge my Mortgage Note in a Chapter 7 Bankruptcy and Still Keep my Home?

Generally, yes you may if your loan is modified in mediation; but you should consult an attorney about your particular situation.  In many instances the bank will approve a loan modification even though you have already discharged your debts, including your mortgage note, in a bankruptcy; however, as will be discussed next, you will nevertheless be liable for that note if you sign a reaffirmation agreement with the bank during your Chapter 7 Bankruptcy.

Summary

While a homeowner generally can proceed to mediation after discharging the mortgage note in a Chapter 7 bankruptcy, there are exceptions to this rule, and one should consult with a bankruptcy attorney.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

Can I Mediate My Foreclosure Case if a Sheriff Sale Has Already Been Set?

Yes.  The Court may approve your request to mediate even though a sheriff sale has been set.  While the mediation will not stop the sale, that sale will not be approved or “confirmed” by the Court.  The Court will first wait to see what the outcome is of the mediation; ie., whether a deal can be worked out with the bank.

Nevertheless, you should still check the court’s docket periodically because at times the court can make a mistake and still confirm the sale. This has happened to me on occasion and I have had to file motions to vacate the sale in emergency hearings.

Summary

While mediation will stop the foreclosure process, it will not stop a sheriff sale; that sale goes forward as scheduled, but the court will generally not confirm the sale and will wait to see the outcome of the mediation.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

Can I File a Bankruptcy and also Save My Home From Foreclosure?

Yes, you can file a bankruptcy and then afterwards try to mediate your mortgage note.

When you file a Bankruptcy,  all of your creditors must stop all collection activities, including the bank. This means that if there is a foreclosure against you that must stop, and your lawyer should tell the court about it. The bank will need permission from the bankruptcy court to foreclose on your home.

After the bank receives that permission and files a complaint, you can then request mediation from the court. However,  getting the Court to approve your request to mediate is only the first step; after that you must now get the bank to agree to modify your mortgage note.

Summary

The bank must ask the Bankruptcy Court for permission to file a foreclosure complaint against you. After you have been served with a complaint, you can then request the court to mediate.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

I am in Foreclosure and Want to Keep My Home, are there Alternatives to a Chapter 13 Bankruptcy?

Yes, if you want to keep your home there are other options besides Chapter 13s.  I always view filing a Chapter 13 Bankruptcy as a last resort to saving a home. The reason is that in a Chapter 13, the bank may not modify your mortgage note; also with a Chapter 13, you need to be making enough money to not only stay current in your mortgage payments, but also to pay off all your mortgage arrearage over three to five years.

Before looking at a Chapter 13 bankruptcy, I first see if my Client can qualify for mediation. This is a court established program in Ohio where the homeowner requests the bank to modify his mortgage note. One can apply to the court to mediate only after the bank has filed a foreclosure complaint to take back his home. From my experience, it is easier to get the bank to modify your note—with more favorable terms- in court established mediation then to go directly with the bank outside of mediation.

Summary

The upside to a foreclosure action is that you may request the bank to modify your mortgage loan in mediation.

If the bank modifies your mortgage note, it will likely put all of your arrearage at the back end of the note. This is known as capitalizing your arrearage. The bank may also lower your interest rate.  The bank may also extend the terms of your note, extending it out over more years, thereby making your payments lower.

Summary

While a Chapter 13 is good for saving ones home, a court established mediation is generally better. If a homeowner wants to save his home, he may be able to modify in note in a mediation.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

Some Differences between Chapter 7 and a Chapter 13 Bankruptcies

There are two kinds of consumer Bankruptcies, Chapter 7 and Chapter 13s.

Chapter 7s deal primarily with discharging or wiping out ones unsecured debts.   These are debts where the creditor does not have any collateral, such as house or a car.  Unsecured debts include credit cards, medical bill and most private judgments, to name a few.  A Chapter 7 though will not help you to save your home if you are behind in your payments.

Chapter 13s, on the other hand, will help you if you are in foreclosure.  With these bankruptcies, your arrearage is paid off over a period of 3 to 5 years.  Also, in Chapter 13s, you do not eliminate your unsecured debts at one time, like with Chapter 7s,  but pay them off over time, sometimes pennies on the dollar.

Summary

Chapter 7s generally deal primarily with wiping out unsecured debts while Chapter 13s deal with saving your home or car if you are behind in your payments.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

The Use of Mediation in a Foreclosure Action- An Interview with Eli Tamkin

In this video, Andy Morris, a real estate broker with MortgageRx.org,  interviews Eli Tamkin, Esq.  about mediation in Cuyahoga County in a foreclosure action. Work with a foreclosure defense attorney who has experience negotiating with banks in mediation.

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Attorney Eli Tamkin has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

At the law offices of Eli Tamkin in Cleveland, we represent clients throughout northeast Ohio, including Cleveland, Avon, Painesville, Cleveland Heights, Shaker Heights, Parma, Elyria, Strongsville, Lorain, Independence, Westlake, Lakewood, Maple Heights and Beachwood; and in Cuyahoga County, Lake County, Lorain County and Geauga County.

We are a debt relief agency.  We help people file for bankruptcy under the Bankruptcy Code

 

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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code as well as provide other representation.


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