You filed Chapter 7 bankruptcy but you want to keep your house, so you reaffirmed the mortgage payment. This means that your mortgage debt will not be discharged in the bankruptcy and you will be liable for the debt. But it also means that you will get to continue living in your house.
Unfortunately, after reaffirming the debt you realize that you can’t afford to continue making your mortgage payments. Now what? Hopefully, you didn’t take too long figuring out that you can’t afford to keep your house. The BankruptcyCode allows you an opportunity to change your mind about reaffirming secured property, but you have to act fast. 11 U.S.C. § 524 states that you can rescind the reaffirmation agreement “any time prior to discharge or within sixty days after such agreement is filed with the court, whichever occurs later.” All you have to do is file notice of rescission with the court and serve notice on the secured lender. No hearing or court appearance is necessary.
Rescission of a reaffirmation agreement is a very simple process and usually doesn’t cost the debtor anything. However, if the reaffirmation agreement was filed just before discharge, the bankruptcy case may close prior to the sixty day deadline for rescinding a reaffirmation agreement expires. If that happens you will need to reopen the bankruptcy case, which will cost you $235.00 for the court’s filing fee.