Home -> Law Blog Directory -> Bankruptcy Blogs -> Florida Bankruptcy Law

OR PHONE (866) 635-1838 for Bankruptcy Help, (866) 635-6190 for Divorce,
(866) 635-2689 for Personal Injury or (866) 635-9402 for Criminal Defense

Find a Local Lawyer

Bankruptcy (866) 635-1838
Divorce (866) 635-6190
Personal Injury (866) 635-2689
Criminal Defense (866) 635-9402

Bankruptcy

: Florida Bankruptcy Law

Chapter 7 Debtors May Have To Reaffirm Personal Liability On Mortgage In Order To Keep House

By Jonathan Alper

ADVERTISEMENTS

If you file bankruptcy and want to keep your car subject to a car loan you have to sign a reaffirmation agreement with the car lender wherein you agree to remain personally liable if you fail to make the payment in the future after your bankruptcy is over. Reaffirmation of car debt is an express requirement in the bankruptcy law. The bankruptcy law does not similarly refer to an obligation to reaffirm a secured debt, such as your home mortgage.

Absent the specific requirement to reaffirm secured loans most bankruptcy debtors refused to sign reaffirmation agreements with mortgage lenders. The listed the mortgage on their bankruptcy schedules to discharge personal liability under the mortgage note while they continued making their mortgage payment. That way, the debtors could stay in their house if they continued making mortgage payments after bankruptcy, but if the debtor?s had future money problems they could walk away from the house and be protected from personal liability because their bankruptcy had already wiped out their personal liability. This was not a problem in the past when housing values were increasing, but the issue became more important when values crashed. When mortgages were no longer secured by underlying value the homeowner?s personal liability became more of a concern.

In 2009, a Florida bankruptcy court required homeowners to sign a reaffirmation agreement tendered by their mortgage lender if the debtor wanted to stay in their house. The court acknowledges that bankruptcy courts around the country differ on this issue, but the court concludes that the law in the 11th Circuit, including Florida, requires reaffirmation of all debts including mortgages. The result is that if you file Chapter 7 and want to keep your house you also may have to commit to future personal liability for the mortgage debt. 2009 WL 3625386

Full post as published by Florida Bankruptcy Law on October 04, 2010 (boomark / email).