Debtor Can’t Reopen Case for Home Loan

A debtor may not reopen her Chapter 7 bankruptcy case in order to enter into a reaffirmation agreement with her mortgage company, says a Roanoke U.S. Bankruptcy Court, but the court’s denial of her motion does not preclude her from continuing to make mortgage payments in an effort to stay in her home.

Under 11 U.S.C. § 524(c)(1), an agreement between a holder of a claim and the debtor, the consideration for which, in whole or in part, is based on a debt that is dischargeable in a case under this title is enforceable only if such agreement was made before the granting of the discharge under Section 727. When similar requests have been filed with the court, it has uniformly ruled that it is without power to ignore the governing statutory provisions which have been enacted into law by acquiescing in attempts by bankruptcy debtors to enter into reaffirmation agreements although a discharge has already been obtained.

Although the debtor’s asserted lack of knowledge of this statutory requirement may be unfortunate, that ignorance does not change what the law is or provide her an opportunity to avoid its application to her case.

Further, the court notes that if debtor has filed an application, or wishes to do so, for modification of her mortgage loan under the federal government’s “HAMP” program, there is no requirement, despite what she may believe or has been told, that a borrower must have entered into a reaffirmation agreement of that loan in order to be eligible for a modification of the loan under that program. This court has previously dealt with this issue in Reynolds Living Trust v. Wells Fargo Bank NA, No. 44-5 (Bankr. W.D. Va. Sept. 6, 2011).

This action by the court does not preclude debtor from continuing to make mortgage payments upon her residence property or the lender (or its loan servicer) from accepting such payments. This court’s denial of debtor’s renewed request to reopen her case does not mean debtor’s efforts to save her home have been doomed to failure.

In re Sharon Louise Owens (Stone) No. 10-72509, Aug. 9, 2013; USBC at Roanoke, Va. VLW 013-4-014, 4 pp.