You filed bankruptcy, your debts are discharged, your case is closed, and now it’s time to rebuild your credit. So, a few months after your bankruptcy closes, you check your credit report and notice that your mortgage company is not reporting your on-time payments to the credit bureaus. What’s the deal?
It’s important to understand that the Fair Credit Reporting Act (FCRA) does not require any creditor to report to the national credit reporting companies. Creditors can choose to report to one, two or all three of them, or not report your accounts at all.
It is common that after bankruptcy, mortgage lenders choose to not report the on-time payments to any of the credit bureaus. If you call them and ask them why they will tell you it is because you did not reaffirm the loan. However, that answer doesn’t really tell the whole story.
Most mortgage lenders operate in many states across the country. Each state has different anti-deficiency laws. These are the laws which determine what you may owe to your lender in the event of a foreclosure of your property. So, lenders have one policy for all states, and that is to try to get you to reaffirm your mortgage.
Arizona’s anti-deficiency laws are quite good. In most circumstances they will protect you from any liability on the loan that was used to purchase the property.
So, what happens if you try to reaffirm a loan where you actually don’t have personal liability in the first place? Some Arizona bankruptcy judges have refused to sign the reaffirmation agreement to make it official. This is because it essentially has no effect.
Now, if you have a loan that was not used to purchase the house, but was taken out later for some other use, then you really don't want to reaffirm because that would bring back the personal liability that you discharged in your bankruptcy.
Therefore, we rarely seek to reaffirm a mortgage in bankruptcy. We understand the having the credit reporting would be nice, but you can quickly rebuild your credit with other positive accounts. And, of course if you refinance your house or sell it and purchase a new home, then you will have a new lender that will likely report your on-time payments.
In 2011, a brand new Hyundai Accent can be had for under $10K. That’s much less than half the price of the average new car. But this peppy little car can’t even crack the top 10 for sales. So, I ask you – why don’t you drive a Hyundai Accent? Because you want more than a stripped-down, cramped, mediocre crash-test scoring mode of transportation. You want a car with features, interior room, and safe design.
Hyundai decided to position the Accent as a car that is attractive on price alone. As a result, other desirables (like air conditioning) and even some necessities (like antilock brakes and adequate frame reinforcement for crashes) are chopped from the base model.
Sadly, there are bankruptcy attorneys who have decided to position themselves as the Hyundai Accents of bankruptcy attorneys. Will they get you where you want to go? Probably. Will it be a comfortable trip? Unlikely. Could it be downright dangerous? Definitely.
Keep this in mind: if a lawyer has to compete solely on price, there is a reason – lack of experience, lack of good client service, or lack of ability to effectively represent your interests in Bankruptcy Court.
I advertise as an affordable bankruptcy attorney. But, that doesn’t mean cheap. It doesn’t mean Hyundai Accent. It means good value while also being reliable, comfortable, and safe. It means we’re a Honda Accord law firm. And, hey, that’s even what I drive!
(P.S. If you do happen to drive a Hyundai Accent, I still think you're a good person, and probably an excellent budgeter too.)
Attorney James Tschudy of the Neeley Law Firm attended the University of Arizona, met his wife in Tucson, and worked in his first law firm at the Whitehill Law Offices in Tucson, Arizona.
So, in addition to the personal service that the Neeley Law Firm already provides in Phoenix, James will now also be available to the residents of Tucson for bankruptcy and debt relief assistance. Appointments are available in Tucson starting in February, so GET STARTED now with a free consultation with James.
Consultations will be provided at 2730 E. Broadway Boulevard, Suite 160, Tucson, Arizona 85716.
Lawyers often get stereotyped as unethical, greedy, or arrogant. Just think of all the Lawyer jokes you've heard. But, there is one profession that may have an equally bad rap – used car salesmen.
Admittedly, some of the reasons behind both of the above stereotypes are legitimate. However, while I started my firm with the goal to change minds about lawyers, today I’m also going to compliment at least one member of the used-car sales profession. His name is Cameron, and I bought my first car from him over a decade ago. Cameron worked at a tiny, rundown, roadside car lot with about 15 vehicles. I’m sure he barely made enough to support his family. Yet, he was friendly, helpful, interested in his potential customers, and never pushy. He had a reputation that was passed by word of mouth around my college, and whenever someone mentioned needing to purchase a car, frequently the conversation would end with: “Go see Cameron, he’ll take good care of you.”
Filing bankruptcy is a complicated process. In fact, it’s complicated before you even start because you have to make some initial decisions about whom will represent you. Here are your four options:
1. Represent Yourself
As in most legal proceedings, a party is entitled to represent his own interests in a bankruptcy. This is called pro se or pro per representation. Some people are successful in doing a bankruptcy this way if they do not have a complicated case and if they have the time and ability to research the law and procedure for bankruptcy. However, even in a successful pro se case, the debtor often misses subtle items that could ultimately cost them more time and money than they would have spent on a lawyer. And, if the case begins to unravel, you will end up seeking out a lawyer and probably paying more than you would have if you had started out with a lawyer in the first place.
Pros: Low initial cost (just the $299 filing fee), learn about legal system, sense of accomplishment
Cons: Risk, potential high long term costs, anxiety of not knowing the process
