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  1. #1
    julieandjulia2 is offline Junior Member
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    Bankruptcy and Wells Fargo

    I filed for personal bankruptcy January 7, 2011 and my debt was discharged on April 13, 2011. Now here is my issue. My fiance and I purchased a home in 2007 and obtained financing through Wells Fargo Home Mortgage. We have a first and a home equity line of credit. My fiance was NOT a party to my bankruptcy, nor was his social security number attached to anything. I asked my attorney several different times if this would affect my fiance in any way, and he was adamant that he would not be affected.

    Wells Fargo did not send any paperwork to reaffirm the debt, and my attorney said that it wasn't necessary anyway because my fiance was the primary borrower and he would be solely responsible for the debts.

    I spoke with someone at Wells Fargo who said that because I didn't reaffirm the debt that these loans will no longer be reported to the credit bureau and they would not be moving the loans to normal status. My fiance wrote letters stating that he was not a party to the bankruptcy, hence his credit should not be affected and the loans should not be affected. We received a letter stating that they REMOVED the reference to the bankruptcy, but they would not be changing anything.

    I contacted my bankruptcy attorney, but of course he has been paid in full and has nothing to do with it anymore. He suggested that I could refile with the bankruptcy court to reaffirm the debt, but that would cost about $1500. I am simply devastated because my actions have affected my fiance.

    My question: is there anything that I can do??? We can't refinance because our house is under water by about $100K and I spoke with my bankruptcy attorney who basically said not to worry about it unless they try to foreclose, but We are not nor have we ever been late with payments.

    Does anyone have any advice?
  2. #2
    asiny is offline Senior Member
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    Quote Originally Posted by julieandjulia2 View Post
    Does anyone have any advice?
    What is the name of your state (only U.S. law)?
  3. #3
    julieandjulia2 is offline Junior Member
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    I'm sorry - I neglected to mention that. California
  4. #4
    asiny is offline Senior Member
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    Quote Originally Posted by julieandjulia2 View Post
    I'm sorry - I neglected to mention that. California
    Perhaps another user can chime in, but with California being a community property state, wouldn't the saying 'what's yours is mine and what's mine is yours' take play here?

    If you had the capability to pay off your debt, as you had access to an equity line (as part of your mortgage- I know, I got the same deal in 2005), you should not have been able to file as bankrupt in order to dismiss debts you owed. Although I am probably wrong on this one... financials are not my strong suit.
  5. #5
    Zigner is offline Senior Member
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    Quote Originally Posted by asiny View Post
    Perhaps another user can chime in, but with California being a community property state...
    Community property laws don't apply to a boyfriend/girlfriend.
  6. #6
    larocque1 is offline Member
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    At face value, it sounds as if Wells Fargo does not know, does not care, or both, about your situation. In these economic times, many mortgage companies, banks, servicers, etc. are overwhelmed with mortgage issues. Many of these corporations are so large that their various departments are spread over multiple states; hence the right hand does not know what the left hand is doing. Unfortunately for you, this large corporation has people employed there that are inept, uneducated/undereducated, act like it is coming out of their pocket, and/or just plain do not know what to do; they just end up rubber stamping your situation. Many of these corporations have been reprimanded for failing to follow legal procedures, and unfortunately it takes court action to force correction.

    In your situation, all you have done as a single filer in a Chapter 7 bankruptcy is remove yourself from any joint and single debt (your own) obligations to get a fresh start. The only way your fiancé’s social security number is associated is on the mortgage loan documents and common address in your credit reports; this is where the confusion may be originating. The loss mitigation may have lumped you both in with the discharge….maybe, maybe not. …just throwing that out there as a possibility.

    There a few unknowns from your post, but here it goes:

    Before, during, or after you filed your bankruptcy, was your mortgage late, behind, etc? You mentioned that a reaffirmation agreement was never proposed or signed; that is why I ask if you or your fiancé were behind on payments.

    You filed Chapter 7 to remove yourself from the mortgage responsibilities (first and second). Do you still have a copy of all your mortgage loan documents? You might want to take a look at the contract and make sure the lender does not somehow retain the right to do what they want in the event (other than death) if either one of you is removed from the loan obligation (like in a BK), they may revoke or call due the mortgage. I don’t know the particulars in real estate or if that is legal in CA, but just offering it as to maybe explain; it may have been a deal breaker if you both were not held accountable.

    Also, were you on both the mortgages and the title? If you are still on the title, Wells Fargo may be having another confusion issue and not understanding that they are separate documents. The mortgage company may require your fiancé to reaffirm the mortgage because you are no longer legally responsible.

    After your received your Chapter 7 discharge, all creditors have 60 days to remove balances, negatives, payments, etc. from your credit reports and zero everything out. If they do not do this, then they are in violation of the Chapter 7 discharge. Since you both were on the mortgage, a lazy employee of Wells Fargo did not do their job properly and reported both of you as a discharge. This is where another point of confusion is another department may not understand why your fiancé was removed/zeroed out, and now they need to re-instate the account status on a discharged loan. You may need to show your discharge document that only your name is on it and signed by the judge.

    Here is something you might want to try:

    Get a copy of your Chapter 7 discharge, your original mortgage documents, statement of intentions, creditor matrix, and credit reports. Also, remember to write down names, employee numbers, times, etc. of any person and department that you speak with, and ask to deal only with managers because this is above and beyond the understanding of the people that answer the initial call. You might also be able to get documentation from your county recorder’s web site on your mortgage documents. Have your fiancé pull a tri-credit report and check to see if any payments made before, during, and after your discharge have been applied. If Wells Fargo is not reporting any payment activity, then they most certainly think you both are a discharge, or require a reaffirmation on his part. The messy part is Wells Fargo may have done some credit report damage to your fiancé that will be difficult to correct because of their incompetence.

    Whatever you do (you, not your fiancé) do not reaffirm those mortgages because all your BK efforts will be for nothing. If your fiancé wants to keep the home, then he may have to reaffirm.

    Before you bring up any reaffirmation, try to work out the correction first with your BK discharge paperwork and hopefully undue any confusion. Be very patient and do not get agitated because it goes a long way. Wells Fargo may need current mortgage contracts with just your fiancé’s name as the sole responsible party. Your attorney is also correct in not to worry unless they start foreclosure proceedings. However, it sounds like you want to resolve this before that happens (if it happens).

    It is not my place to ask why, but if you are over $100k upside down in that home, it will take more years than a BK waiting period (time to be able to file BK again) to even break even and sell the home. Your fiancé sounds like he is doing Wells Fargo a solid by wanting to pay and maintain his end of the agreement, but Wells Fargo just does not care.

    The bottom line is Wells Fargo screwed up, and now it is up to you and your fiancé to do someone else’s job and correct the problem. Your attorney is correct in that your fiancé was the primary on both mortgages, and it should not be this issue you are having. I apologize for the long winded response, but hopefully this may offer some explanation or reason.

    Good luck to you.
  7. #7
    asiny is offline Senior Member
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    Quote Originally Posted by Zigner View Post
    Community property laws don't apply to a boyfriend/girlfriend.
    You know what- I completely missed that part.. I saw 'fiance' and made the leap to married.. this is my misunderstanding.

    In that case, cpl would not apply here. But I knew another user (larocque1) would come along with much-more (valid) experience here.
  8. #8
    julieandjulia2 is offline Junior Member
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    Thank you so much for your input and advice. This is much more than my attorney has done. His last piece of advice: if you go to purchase a new home in the next few years, just write an explanation of what happened. He also said that if they did damage to his credit report, he would file a lawsuit. of course now he remembers none of that - thank goodness for email records.

    To answer your questions:
    No, we were never late with payments for either the first or the 2nd. They were on automatic payments from our checking account. That stopped the minute I filed bankruptcy.

    I definitely have copies of our mortgage paperwork, as well as my discharge. I am going to run credit reports for both me and my fiance to see what else has happened since April.

    I am on the loan as well as the title. We were listed as tenants in common.

    My question - what would happen if I were to reaffirm the mortgage debt? I don't have the slightest clue how my fiance would reaffirm since he is not listed anywhere on my bankruptcy.

    Current loan documents? Would that mean refinancing or simply rewriting the documents in his name only? Obviously a refi isn't going to happen because of the situation, but do banks even consider that?

    We are in this house simply because we aren't ready to make a move. My fiance retires in about 10 years, and while we may never break even, short selling now doesn't make sense. At least right now. Who knows what will happen in a year's time.

    Thank you again for helping me.
  9. #9
    larocque1 is offline Member
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    When you say the automatic payments stopped from your checking account when you filed your BK, then did your fiancé continue to make manual payments? If he did not continue to make payments for that 3-4 month BK duration, then Wells Fargo has that against him now. Even though you are not required to make payments during your bankruptcy (protection of the automatic stay), the mortgage company will still consider that as unpaid debt. The automatic stay essentially freezes everything in place meaning creditors cannot demand payments, and they cannot take your house. The debts you list for discharge are gone at the end of the bankruptcy, but the debts left out of the BK are going to need to be paid. You removed yourself from the mortgages, and since your name was on the loans, you did not need to make payments during your BK. Common advice from attorneys is to stop paying on everything. However, if you intended to keep the house, then it would be better to keep paying as once the automatic stay is lifted, your account will be behind.

    To answer your question as to what would happen if you were to reaffirm the mortgage debt; the debt would become legally yours once again. I would not recommend this, but it is up to you as you know your situation best. Once you reaffirm, you cannot walk away from the debt again (until you are eligible for another BK). The purpose of your Chapter 7 was to remove you from the mortgage obligation, so I would not reaffirm.

    Current loan documents would mean that your fiancé either reaffirm or refinance his obligation with Wells Fargo. Depending on how his credit rating looks, Wells Fargo may consider a refinancing option. Your house is upside down in value, but what some lenders do to get people caught up and current is to refinance the debt. Typically they may lower the interest rate, and take your rearranges and put them on the tail end of the loan. Also, they like to extend the terms out to 40 years as well. Essentially he will be stuck in that mortgage forever, but it will be current. Some people view it as “renting” the home from themselves as they know they can never sell it because of the amount owed vs. value.

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