What is a Reaffirmation Agreement?
A Reaffirmation Agreement is an agreement between you and one of your creditors holding a security interest in property that is part of your Chapter 7 bankruptcy. Typically, the property in question is car. The Reaffirmation Agreement is made when you want to retain the car and continue to make your monthly payments. It takes a debt that would otherwise be dischargeable and removes it from the bankruptcy proceeding. As to that specific debt, it is as if it was never part of your bankruptcy.
Why would you want to Reaffirm a debt?
The quick answer is that you want to keep your car or other securitized property (meaning the creditor holds a security interest in the property). By entering into a Reaffirmation Agreement you also get the benefit of the creditor to continue to report to the credit bureaus that you are making your payments on time and this will help you rebuild your credit after bankruptcy.
It is very important to understand that you need to continue to make timely monthly payments for the Reaffirmation Agreement to be of any benefit to you. If you are late or miss payments you are defeating the purpose. If you fail to make payments, you also run the risk of repossession and a lawsuit for potential deficiency caused by your failure to pay. Remember, at that point the Bankruptcy Discharge does not protect you. So it is important that you carefully consider whether or not a Reaffirmation Agreement is in your best interests. This is where an experienced Bankruptcy Attorney can help you evaluate your specific situation and help you make an informed decision.
Are you considering filing for bankruptcy?
If you are considering filing for bankruptcy, it is important that you speak with a bankruptcy attorney who can help you evaluate your potential homestead exemption and issues that may impact your exemption status in bankruptcy. Every bankruptcy case is different, so what has worked for one debtor may not necessarily work for another. If you are in Miami-Dade County or Broward County, Florida, please feel free to contact us to set up a FREE consultation to discuss your specific situation.
This blog post is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. Use of this blog does not create an attorney-client relationship. Reading this post is not a substitute for obtaining legal advice based on the unique facts of your situation from an attorney licensed to practice law in your state. No representation is made regarding the current state of the information contained in this post. Examples that may be provided in this post are merely for illustrative purposes; the results in your case may be different and no results are guaranteed.