What does it mean to reaffirm debt in a bankruptcy?

Published by Anaya Cole on

What does it mean to reaffirm debt in a bankruptcy?

CITY BAR JUSTICE CENTER. Reaffirmation agreements are strictly voluntary. A debtor is not required to reaffirm any of his or her debts. If a debtor signs a reaffirmation agreement, the debtor agrees to pay a debt that otherwise might be discharged in his or her bankruptcy case.

Why would someone choose to reaffirm a debt?

Reaffirming a debt allows you to keep the property securing the debt, which can be a real advantage in some cases. It also allows you to avoid having to come up with a lump-sum payment to keep the property.

What does it mean to reaffirm a debt in Chapter 7?

Reaffirmation is the process wherein you agree to remain responsible for a debt so that you can keep the property securing the debt (collateral). You and the lender enter into a new contract—usually on the same terms—and submit it to the bankruptcy court.

What happens when you reaffirm a debt?

Even if you continue to make timely payments, your lender can still take your property back if you fail to reaffirm the debt. While many lenders are happy to receive your payments and let you keep the property without a reaffirmation, some (especially certain car lenders) will still repossess your property.

What does it mean when a debt is not reaffirmed?

If the debt has not been reaffirmed and there is a default, the lender may only pursue its collateral and will not be able to pursue the individual if there is any money still owing.

What does it mean to reaffirm a debt during bankruptcy?

Car lender sends reaffirmation agreement to borrower

  • Borrower reaffirms debt by completing it and returning it to auto lender
  • Auto finance company files reaff agreement with the court
  • Bankruptcy judge wants to ask borrower about it and be sure you understand what you’re doing and can afford this car and are willing to get stuck with the balance
  • What happens when a reaffirmation is denied?

    What do you think your car (or other property) is worth?

  • Can you afford to make the monthly payments under the reaffirmation agreement?
  • Has your income or expenses changed since filing your case?
  • Do you receive help from your friends or family to make the payments on this debt?
  • Have you ever missed a payment on this debt?
  • Can a creditor ask a debtor to reaffirm a debt?

    since a debtor cannot unilaterally force a reaffirmation agreement on a creditor ( in re turner, 156 f.3d at 718 ), in those jurisdictions that do not permit the debtor to continue making payments under the original contract without a reaffirmation agreement (the so-called “fourth option”), the debtor who is unwilling to surrender the collateral …

    What does reaffirmation mean in bankruptcy?

    Reaffirmation Agreement Defined. A reaffirmation agreement is a legally binding agreement between you and a secured creditor.

  • Pros and Cons of Reaffirmation Agreements.
  • Choosing to Sign a Reaffirmation Agreement.
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