u tWhen you file for bankruptcy, the goal is usually to discharge debts. However, in some cases a filer actually wants to keep paying one of their debts even though their bankruptcy filing could just wipe it out. This is known as making a reaffirmation agreement. A Rockland County Chapter 7 bankruptcy lawyer from our firm can tell you more about how these work and when you may want to reaffirm a debt.
How Can I Benefit From a Reaffirmation Agreement?
When you make a reaffirmation agreement, you are saying that you will continue to pay a debt instead of getting it wiped out during the bankruptcy process. This is usually something that people can ask for in a Chapter 7 case, where assets are sold off and as much debt as possible is paid. When you say that you’ll continue paying a debt, you get to keep the asset associated with it.
What Kind of Assets Can a Reaffirmation Agreement Help Me Keep?
So it’s not a surprise that a reaffirmation agreement is usually used to keep a big-ticket asset, like a home or a car. If you say that you’ll continue to make car payments or mortgage payments, you won’t lose the asset. Your debt remains on your record and you are agreeing to pay some or all of what you owe to your creditor.
You do have to be careful about this though. If you reaffirm a debt and you still have money problems as a result, you are probably not going to be able to file for bankruptcy again anytime soon and address it. You take the hit to your credit score due to bankruptcy filing, but you don’t get the clean financial slate you would have had if you had just let the debt be wiped out.
It’s important to do the math and see if you really have committed to spending too much on a car, home, or other asset before you reaffirm. If you have, you might be better off letting that object go.
Can a Creditor Make Me Sign an Agreement?
We should also note that this is a voluntary agreement signed by the bankruptcy filer. A creditor cannot ask you to sign a reaffirmation agreement. You can decide if you want to try and keep an asset and the associated debt.
When Should I Start Thinking About Reaffirmation?
You should begin thinking about any debts you want to reaffirm as soon as you file for Chapter 7 bankruptcy. Your lawyer can help you draw up an agreement before your case gets discharged. You have to enter into a reaffirmation agreement before that stage of your case.
Schedule a Consultation
Filing for bankruptcy is a big decision and dealing with all of the related paperwork isn’t exactly easy. That’s why you should contact The Lauterbach Law Firm if you’re considering going this route. We can help you file and get a fresh financial start.
