[CLBS] Refinancing Home Loan & Reaffirmation Agreements

[Randal French]

I suggest that your client just sign off on a reaff and provide it to the lender without reopening and filing the reaff.  To be effective, a Reaff must be filed before the discharge order is entered, so unless you move to set aside the discharge order, then file the reaff, then have the discharge order re-entered, the reaff will have no legal effect.  So no harm no foul and no liability based upon the reaff.  From the perspective of ethics, do you think that your client can ethically sign off on a reaff at this point, knowing or expecting that it would not actually lead to a reaffirmation of the debt and would not lead to personal liability being reinstated, to induce the knucklehead, I mean lender, to refi the loan?  Is this a case that the lender is charged with the obligation of knowing the law so it should know that a reaff signed after the discharge order is entered is of no legal force or effect?

I do not know of any basis to say that a lender has to disregard the fact of discharge of a debt but it sure does not seem right.  Personal liability on a debt that is being refinanced should not really enter into consideration.  This is the loan that is getting paid off.  But the new lender may be thinking that if the discharged loan can not be enforced other than by foreclosure, a refinance of a discharged debt may also be one that could not be enforced other than by foreclosure.  If so, then no one would want to make a loan based on only the ability to foreclose if payments were not made.  This may be a matter of a good decision at the time of the bk filing may well cause problems with a refi later.  I have seen that myself.



-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Jon Wilson
Sent: Tuesday, February 12, 2013 11:10 AM
To: clbs at admws.idaho.gov
Subject: [CLBS] Refinancing Home Loan & Reaffirmation Agreements


The lender for my client's residential loan will only agree to refinance
their loan if they reopen their closed chapter 7 bankruptcy and execute a
reaffirmation agreement.  Can a closed chapter 7 case be reopened for the
purpose of entering a reaffirmation agreement?  Can a lender (Bank) agree to
a refinance of a residential loan, but only if borrower enters a
reaffirmation agreement?

 

Thoughts, suggestions, etc.  Thanks.

 

Jon R. Wilson

Attorney at Law

 

Wilson Law Offices, P.C.

4614 W. Emerald St.

Boise, ID 83706

Tel. (208)343-8400

Fax (208)424-5006

Email:   <mailto:jon at boiselaw.org> jon at boiselaw.org

 

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