A reaffirmation agreement is a formal contract made between you and the creditor that states you will pay all or a portion of the money you owe in spite of the Chapter 7 bankruptcy filing. As long as the reaffirmation agreement is followed, you can keep your property or your home after the bankruptcy and the creditor gives their promise to not repossess or take back the property as long as your payments are made per the agreement.

It is important to consult with an attorney before entering into an agreement such as this to ensure that your rights are protected and that it is in your best interest. If you are not represented by an attorney, then you must have a bankruptcy judge approve your reaffirmation agreement. The judge will ask questions to make sure that the reaffirmation agreement does not impose an excessive, unnecessary burden on you or your dependents. If it is determined that it is impossible for you to pay off the debt on your mortgage, a reaffirmation agreement may not work for you.

The experienced bankruptcy attorneys here at Clark & Washington understand the laws governing reaffirmation agreements in Florida. Give us a call today to schedule a free consultation if you are interested in filing Chapter 7 but would like to keep your home in the long run.

Specifically, the national average on 60 day delinquencies for car loans is .81%, while the 90 day delinquency average for credit cards is 1.10%. Although these are relatively small percentages in this current economic situation, the most staggering number is the delinquency on mortgages at 6.25%, almost six times higher than the other loans.

Not surprisingly, the states that have been hardest hit with foreclosures, bankruptcies, and unemployment also have the most delinquencies. Nevada, which boasts the highest number of personal bankruptcy filings in the country, also has the largest number of mortgage delinquencies at 14.53%. The credit card and auto delinquencies are also higher than the national average, at 1.98% and 1.16% respectively. Florida is not far behind, with its mortgage delinquency rate at 13.34%. Florida, however, has better statistics for its auto and credit card delinquencies, at .99% and 1.47%, respectively.

Why is this trend in the way people make payments occurring? According to the Director of Consulting and Strategy for TransUnion, “Consumers recognize that their credit cards are their primary purchasing vehicles in this economy.” Using this logic, it appears that people, who are unemployed, want to maintain a good relationship with their credit card companies as they find themselves using these same cards for everyday necessities, such as food, paying utilities, clothing, and gas. Additionally, people find that they need their cars to go to jobs or to interviews for a job, and as such, do not want to have their vehicle repossessed. Individuals, in these situations, cannot afford to have these cards or cars taken away, as they provide for their basic needs. Their homes, however, do not hold the same weight.

Aside from individuals needing to use their credit cards and vehicles, they are also reluctant to pay their mortgages on time because of the lack of equity in their homes. People can see the value in their credit cards, paying for food, and their cars, getting to them work, but they cannot see value in a home, in which they owe 20% more than what the home is currently worth. Instead, individuals would rather have a home foreclosed on and continue to keep food on the table. Additionally, more and more individuals care less about a foreclosure remaining on their credit report for seven years. They simply rationalize that they will not own a house for a couple of years and rent instead. Until the housing markets rebounds for a number of consecutive months and unemployment reverses, it is likely that this trend will continue and even increase. It is not hard to understand, however, as people without jobs simply want to take care of their family, food, clothing, etc., and credit cards supply them with that opportunity.

Because there is generally no financial aid for homeowners facing foreclosure, many mortgagees are unable to defend their homes from bank actions.  Chapter 13 bankruptcy can stop a foreclosure, but it ought not be a homeowner's only recourse.

Mortgage modification programs, loudly touted by mortgage industry lobbyists fighting legislation in Congress that would allow bankruptcy judges to modify the terms of a mortgage in a bankruptcy, have done little to stem the tide of foreclosures.  Time notes that the Boston-based National Consumer Law Center reported that many large banks and other mortgage servicers have decided it's cheaper to foreclose than to offer more affordable loan terms.

Because foreclosure in Florida requires court involvement, it is always in your best interest to seek legal counsel to discuss your options. Consumer firms like Clark & Washington offer no-cost consultations, while firms that specialize in foreclosure defense may charge a nominal fee. Either way, do not assume that you have no choices and do not wait until the last minute before acting.

It is unclear exactly how the Fed's policy will be implemented, or when regulations and procedures will be published.    Further, according to the AP story, the amount of mortgage securities in question, valued at up to $74 billion, pales in comparison to the $1.75 trillion in outstanding risky loans, according to trade publication Inside Mortgage Finance.

It will be interesting to see if the Federal Reserve policy has any signfiicant impact on the foreclosure or bankruptcy rate.

McCain:
1. Proposes to spend up to $10 billion to allow some homeowners to trade high-interest, adjustable-rate mortgages for fixed-rate loans.
2. Proposes a suspension of the 18.4-cent federal gas tax and 24.4-cent diesel tax during the summer.
3. Supports a middle-class tax cut by doubling the personal tax exemption for dependents to $7,000.
4. Calls for a simpler tax system with two tax rates and a generous standard deduction.
5. Supports making permanent the 2001 and 2003 income tax cuts and proposes cutting the corporate tax rate to 25 percent from 35 percent and allowing businesses to immediately write off capital expenses.
6. Believes government assistance to the banking system should focus on preventing systemic risk that would endanger the financial system and the economy.

Obama:
1. Calls for greater government regulation of the U.S. financial system and proposes a new $30 billion economic stimulus plan to help homeowners, including a $10 billion foreclosure prevention fund to help people keep their homes and $10 billion in relief for state and local governments hit hardest by the housing crisis.
2. Outlines six “core principles for reform” that would give the Federal Reserve supervisory authority over any financial institution to which it might make credit available and calls for reform and streamlining of financial regulatory agencies.
3. Wants to repeal a provision in the bankruptcy law so ordinary families can modify terms of home mortgages.
4. Proposes a 10 percent mortgage tax credit for middle-class Americans.

Of course, campaign promises and even party platforms don't mean a whole lot, but it is interesting to observe how differently the candidates approach the problem.  Which approach makes the most sense to you – both in the near term and in the long term?

Thanks to Port Richey real estate agent Tish Osborne for publishing this comparison table on her Real Town blog.