Q: Bankruptcy liability with a house loan modification in Maryland
Filed ch7 in Maryland (April 2016) and surrendered the house (did not reaffirm). We were discharged Oct 2016. Mortgage company has now offered a loan modification but is not requiring a reaffirmation. Loan modification paperwork states: "If Borrower(s) received a discharge in a Chapter 7 bankruptcy subsequent to the execution of the Loan Documents, the Lender agrees that such Borrower(s) will not have personal liability on the debt pursuant to this Agreement". From my research I have found that "Loan Documents" means ORIGINAL Loan Documents. This is a modification, not a new loan (as in a refi).
Does this mean that we can sign the loan modification paperwork and if 3 years down the road cannot afford the house, we can still walk away without any liability to the deficient? I know the mortgage company retains the right to foreclose so I am just wondering if our liability is removed now and I want to make sure that accepting a loan modification will not reinstate liability.
A: That doesn't sound sensible. It is "too good to be true," and when things sound too good to be true they usually aren't. You'd be foolish to sign that without having it reviewed in total with a competent lawyer. It is quite easy to reaffirm a debt in bankruptcy, and it is even easier to enter a new debt after discharge. You need to read the whole contract and loan modification in total and understand why a lender would offer a non-bonding loan rather than foreclosing. If there is no hidden reobligation, you might be able to move forward.
Stuart Nachbar agrees with this answer
A: It says if you got discharge after execution of documents...your facts says you got discharge first. You would be responsible.
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