As a bankruptcy firm, we deal on a regular basis with a large amount of creditors, both local and national. However, it always seems that there are a few creditors who just can’t get their act together. GMAC Mortgage is one of those creditors. They are already being investigated for their role in potentially thousands of wrongful foreclosures. (http://www.mlive.com/business/detroit/index.ssf/2010/10/bailout_watchdog_probes_gmac_f.html). Their parent company, GMAC, was the recipient of a generous 17.2 billion dollar bailout, courtesy of the American taxpayers (http://www.cbsnews.com/stories/2010/03/11/business/main6288455.shtml), after they were allowed to change their corporate identity in order to qualify (only banks were eligible at the time of the bailout). Given these events, you would think that they would be concerned about rehabilitating their public relations. Instead, along with other banks, they are vigorously refusing to provide information about the maintenance of loans that are involved in bankruptcy proceedings to the Office of the United States Trustee. That’s right. They are not cooperating with an agency of the very same government that authorized the bailout in the first place! (http://www.nytimes.com/2011/05/15/business/15gret.html?pagewanted=all). Imagine if your brother asked you for a loan, but refused to tell you what is for, what he would do with the money, or how you would be paid back?
In Chapter 7 cases, it is common practice for a Debtor to “reaffirm” or keep a loan that is secured by their house. In almost every case, the reaffirmation agreement is prepared by the creditor, as it requires the disclosure of principal, interest, and repayment terms, which can vary from day to day. In addition, the reaffirmation agreement is for the creditor’s protection. It does not yield any benefit for the Debtor, as it means that if anything goes wrong and the debtor is unable to make the payments on the loan, they will be personally responsible for the debt. The reaffirmation agreement protects the creditor in the event that the Debtor should change their mind and “walk away” from the loan years after the bankruptcy case is over.
Attached is a response that our firm received to a standard request for a reaffirmation agreement from the GMAC Bankruptcy Department. No confidential information is in the document. Just for fun, read it aloud a couple of times. Even better, have one of your children in middle school offer a critique. I would be embarrassed if an employee of my office ever sent out a document so full of grammatical errors, and subject-verb disagreements. Remember that our government believed that GMAC and GMAC Mortgage was worthy of a $17.2 billion bailout, yet GMAC Mortgage would not merit a passing grade in a 6th grade writing class.