Re-performing note files Ch 7

[Matt Devincenzo]

I hold several re-performing 2nds in my IRA which are serviced by FCI. This morning I got an email that a borrower that was modified ~2 years ago and has been paying since then on time ect, filed Ch7 on 12/23. I'm looking for some guidance on the process and to get an idea of how I need to handle the note. I know that I need to have a Proof of Claim filed....and from some past threads I see that the borrower can re-affirm the debt potentially, or not....

The loan has a UPB of ~22K +/- (I have to login to check specifics) and a maturity date of 2047, it is in MA and the regular monthly payment is ~$225/mo +/-. Is this something I need to engage an attorney to get involved with now, or can I complete the POC? Any tips on what to do/not do at this point?

It seems from the past threads this can be good for me (borrower re-affirms) and they have additional funds each month to pay this debt. Or less good, but not too bad (borrower doesn't affirm) and I may need to explore FC from 2nd position....which depends on the status of the first, which I am not currently aware of.

[Chad U.]

Originally posted by @Matt Devincenzo:

@Chris Seveney thanks, I was able to get on and download a copy of the filing from FCI, and it looks like they noted this debt as one that they intend to re-affirm and pay. So I need to be sure to file the POC, and then I believe just wait out the process. It looks like there are several CC/medical debts they're wiping out as well as a couple small balance liens for judgments which have attached to their primary residence. The first has a balance of $125K which they claim a market value of $145K (I believe it is higher, though as a distressed sale $145 might be right). So I'm somewhat equity protected...though that could be wiped out if they were to stop paying and started incurring FC fees.

You don't need to file a POC on a BK7, but you need to file the Reaffirmation Agreement and send to the borrowers BK attorney for their signature.  Oftentimes they are advised not to sign it by their attorney so is usually a wasted effort. I would double check with your attorney, and if FCIs internal BK department doesn't do this paperwork have yours file it.