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Reaffirmation Agreement Reaffirmation Agreement

Should I Sign my Reaffirmation Agreement? Featured

Oct 26 2017

Commonly bankruptcy debtors desire to maintain ownership and payments on their car loans. The creditor in this case may want the debtors to sign a reaffirmation agreement. This reaffirmation agreement is exactly how it sounds (the debtors re-affirm to pay the debt) similar to the original contract and promise to pay, this reaffirmation indicates to the creditor and court that the regular rules around the loan survive and exist despite the bankruptcy. The benefits to the reaffirmation agreement for the debtor is the creditor should resume regular positive reporting of timely payments to the borrowers credit profile. A borrower should discuss with their attorney if the agreement should be signed as the creditor can not compel the signature.

What are your obligations if you reaffirm a debt?

A reaffirmed debt remains your personal legal obligation to pay. Your reaffirmed debt is not discharged in your bankruptcy case. That means that if you default on your reaffirmed debt after your bankruptcy case is over, your creditor may be able to take your property or your wages. Your obligations will be determined by the Reaffirmation Agreement, which may have changed the terms of the original agreement. If you are reaffirming an open end credit agreement, that agreement or applicable law may permit the creditor to change the terms of that agreement ill the future under certain conditions.

Are you required to enter into a reaffirmation agreement by any law?

No, you are not required to reaffirm a debt by any law. Only agree to reaffirm a debt if it is in your best interest. Be sure you can afford the payments that you agree to make.

What if your creditor has a security interest or lien?

Your bankruptcy discharge does not eliminate any lien on your property. A "lien" is often referred to as a security interest, deed of trust, mortgage, or security deed. The property subject to a lien is often referred to as collateral. Even if you do not reaffirm and your personal liability on the debt is discharged, our creditor may still have a right under the lien to take the collateral if you do not pay or default on the debt. If the collateral is personal property that is exempt or that the trustee has abandoned, you may be able to redeem the item rather than reaffirm the debt. To redeem, you make a single payment to the creditor equal to the current value of the collateral, as the parties agree or the court determines.

How soon do you need to enter into and file a reaffirmation agreement?

If you decide to enter into a reaffirmation agreement, you must do so before you receive your discharge. After you .have entered into a reaffirmation agreement and all parts of this form that require a signature have been signed, either you or the creditor should file it as soon as possible. The signed  agreement must be filed with the court no later than 60 days after the first date set for the meeting of creditors, so that the court will have time to schedule a hearing to approve the agreement if approval is required. However, the court may extend the time for filing, even after the 60-day period has ended.

Can you cancel the agreement?

You may rescind (cancel) your Reaffirmation Agreement at any time before the bankruptcy court enters your discharge, or during the 60-day period that begins on the date your Reaffirmation Agreement is filed with the court, whichever occurs later. To rescind (cancel) your Reaffirmation Agreement, you must notify the creditor that your Reaffirmation Agreement is rescinded (or canceled). Remember that you can rescind the agreement, even if the court approves it, as long as you rescind within the time allowed.

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Carmenelisa Perez-Kudzma

Practicing law is my passion. At age eight a presidential speech motivated me to pursue my dreams of becoming an attorney. My singular purpose is to effectively represent my clients in the court of law.

Website: www.pklaw.law
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