Michigan Homeowner Assistance

Michigan homeowners who are defaulting on their mortgage or property taxes can receive financial assistance through the “A Step Forward” program. Homeowners who have had a financial hardship can apply for the program to pay mortgage arrears, partial mortgage payments or delinquent property taxes. Homeowners can also apply for a mortgage loan modification through the program.

Homeowners can apply even they’re in a Chapter 13 bankruptcy. Homeowners in a Chapter 7 bankruptcy must wait until after discharge to apply. For more information and to apply, homeowners can visit the following web site: A Step Forward

Mortgage Reaffirmation in Chapter 7 Bankruptcy

In a chapter 7 bankruptcy discharge, the underlying mortgage debt is discharged, but the lien remains. This means that a creditor cannot force a debtor to repay the debt, but if the debt is not paid, the creditor can still foreclose on the property. However, if a debtor signs a reaffirmation agreement with the creditor, then the creditor can still take action to collect the amount owed.

Generally, it is not a good idea to sign a reaffirmation agreement during a chapter 7 bankruptcy case. After a chapter 7 discharge, Debtors are allowed to keep their home as long as they continue making their mortgage payments. In the future, they may just walk away from their home if they decide that the payments are no longer affordable or if they just have no desire to keep the home. However, if a debtor signs a reaffirmation agreement, the creditor can sue the debtor or take other action to collect the remaining balance. Without the reaffirmation agreement, the creditor can only take the property in a foreclosure action.

Some debtors are concerned about how their payments are reported on a creditor report if no reaffirmation agreement is signed. That’s because some mortgage companies stop reporting payments if no reaffirmation agreement is signed by the debtor. However, debtors always have the option to submit payment information to the credit reporting agencies themselves.

Determining Property Values in Bankruptcy

Everyone who files bankruptcy must disclose all of their real and personal property. The value of real estate can be easily done with an appraisal or market analysis. For cars, debtors can look at the blue book value. The biggest problems with valuation arises when debtors attempt to determine a value for other personal property such as clothing, household goods and furnishings.

When determining value, it’s important to think carefully about what you actually own. You must consider the age and condition of the property. Although jewelry, antiques and collectibles often increase in value, most property items decrease in value. Therefore, old clothes, furniture and appliances will usually be worth less than the original purchase price.

Generally, property is worth what someone else is willing to pay for it. If you’re completely unsure about what you should list as the value of certain property, it can be helpful to browse web sites that feature used items for sale such as eBay and Craigslist. Ultimately, the value that you list will be an educated guess because there is no way to know for sure how much someone is willing to pay for something unless you actually attempt to sell it.

Some of my clients have inquired about whether the bankruptcy trustee would show up at their homes to look at their personal belongings. I have not seen it happen, but it can happen if the trustee has a reason to believe that the debtor owns more than what is listed on the bankruptcy schedules.