If you are current on your payments, it’s unlikely that the bank will foreclose on your property if you refuse to reaffirm the mortgage in Chapter 7.
By signing the reaffirmation agreement, you accept liability for the loan after bankruptcy, meaning that you can be sued and collections activity, including wage garnishment, implemented if you fall behind on payments.
If you don’t sign the reaffirmation agreement, the bank will stop doing several things.
First, you may not receive monthly statements anymore, and the bank may not allow online payment of your mortgage, so you’ll have to be prepared to send a monthly check and monitor your payments.
Second, the bank will stop reporting your payments to credit reporting agencies, so the property will stop working for your credit score.
Reaffirmation doesn’t apply in every bankruptcy case, but it’s important that you know the advantages and disadvantages of all agreements you enter into in bankruptcy.
Call the attorneys at Zelenitz, Shapiro & D’Agostino today at 718-599-1111 for a free consultation.