What to do if my bank says that I need to have the courts permission to refinance my morgage 4 years after my bankruptcy because there was no reaffirmation of the loan?

The short answer is no, you do not have to sign a reaffirmation agreement for any of your debts. It is completely up to you if you want to reaffirm a debt. The main reason for signing a reaffirmation agreement is if you want to keep a secured asset such as a car or home.

When you sign a reaffirmation agreement, you are promising to continue to pay that debt at the current terms or at new negotiated terms. The reaffirmation agreement has to be filed before your bankruptcy is discharged. A debt cannot be reaffirmed after a discharge.

Asking if you should sign a reaffirmation agreement is different. Only sign a reaffirmation agreement if you can afford to continue paying on the debt. Signing a reaffirmation agreement is a legally binding promise to pay. The document is filed with the bankruptcy court. If you stop paying, the creditor can resume collection efforts. The bankruptcy you just filed will not protect you from collection efforts on the reaffirmed loan.

It is not just up to you if you want to reaffirm a debt. A bankruptcy judge and your attorney have to approve the reaffirmation. You have to have the means to pay the debt.

In the document, you list the type of loan, total amount, interest rate, monthly payment, asset description, market value, description of item, terms before and after the reaffirmation and whether you have an attorney.

Part of the document asks you to list your income and expenses. If you do not have enough income to pay your expenses or to pay this debt, the judge will probably not agree to the reaffirmation. A reaffirmation agreement guides you through the form and at times will help you decide whether it will cause undue hardship to repay the loan. The final questions ask how you can make the payments if your monthly income is lower than your monthly expenses and whether you believe that signing the agreement is in your best interests.

If you cannot pay the loan as agreed in the reaffirmation, the creditor can take possession of the house or car. If the lender sells the asset for less than the loan amount, you will be responsible for paying the difference to the lender. Some attorneys do not recommend reaffirmations for this reason.

Answer: You do not need the court's permission to refinance your mortgage after you have received a bankruptcy discharge. It is simply an issue as to whether you will qualify for a refinance.