Can a Mortgage Still Be Modified Even We Did Not Sign the Reaffirmation Agreement After Bankruptcy?

Modification

Modifications alter the terms of your mortgage, with the aim of making your monthly payments less burdensome. Your lender may modify your loan in any number of ways. Your lender could increase the loan’s duration, thereby reducing the payments. Your lender could also add your missed payments to the loan’s balance, and recalculate your future payments based upon that amount. Lowering your interest rate and forgiving parts of the debt are other means of modifying the mortgage.

If your lender is willing to negotiate, you may be able to modify your loan terms using the reaffirmation agreement. Reaffirming a debt means that you are still legally responsible for it after bankruptcy. It's very important that you consider whether you can actually pay the debt without imposing an undue hardship on yourself and your family. If you change your mind about reaffirming your debt after you have already filed the agreement, you may cancel the agreement within 60 days of the date you filed it with the court, or prior to your discharge date.

You may want to consider converting your case from a Chapter 7 bankruptcy to a Chapter 13 bankruptcy, if your mortgage company will not work with you. Chapter 13 will take all your past due mortgage payments and spread them out over a three- to five-year period. This will enable you to get caught up without facing foreclosure. Chapter 13 also has a lien stripping option, which removes the second, third and other mortgages from your home when the home is worth less than the balance on the first mortgage. Stripping the liens should mean having a smaller mortgage payment every month.

You don't have to file a reaffirmation agreement immediately after filing bankruptcy. You have up to the time of your bankruptcy discharge, or up to 60 days following your 341 meeting, to file a reaffirmation agreement. As a general rule, if you don't reaffirm your mortgage debt in time, then you will not owe it anymore. If your lender allows you to stay in the house after the bankruptcy, any modified loan terms will likely be in the form of a new loan, because your original loan was discharged in the bankruptcy.