What is a reaffirmation agreement in a bankruptcy?
Reaffirmation is a type of agreement a debtor makes with a lender to repay some or all of a debt despite going through bankruptcy proceedings. When a person files for bankruptcy, they do so in order to be relieved of a debt burden they cannot pay.
What is a mortgage reaffirmation agreement?
A reaffirmation agreement is a legally binding agreement between you and a secured creditor. In the case of a mortgage, the agreement is between you and the mortgage lender. The agreement states that you agree to pay a loan under the same terms and conditions of its original contract.
When is a reaffirmation agreement cancelled in bankruptcy?
A reaffirmation agreement can be cancelled by a debtor by the later of: (1) the issuance of a discharge in the bankruptcy case or (2) 60 days from the date the reaffirmation agreement is filed with the bankruptcy court.
What happens if you sign a reaffirmation agreement?
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. There may be other ways to renegotiate payments with creditors without entering into a reaffirmation agreement. A creditor cannot compel you to enter into a reaffirmation agreement.
What happens if a debtor defaults on a reaffirmation agreement?
Once bound by a reaffirmation agreement, the debtor will be perso- ally liable for the debt. If the debtor defaults later, the creditor can obtain a judgment against the debtor personally in addition to repossessing the property securing the debt.
What happens if you reaffirm a car loan?
As such, reaffir- mation can have significant financial consequences. For example, if a debtor reaffirms a car loan and misses a payment in the future, the creditor may be able to repossess the car and/or sue the debtor 8 | BANKRUPTCY: UNDERSTANDING REAFFIRMATION AGREEMENTS CITY BAR JUSTICE CENTER for the balance of the loan.
Should you sign a reaffirmation agreement?
As a general rule, entering into a reaffirmation agreement is not generally advised. Many attorneys will advise their clients not to sign reaffirmation agreements, unless there is a specific benefit to be obtained in signing the agreement. This is because the primary goal of filing for Bankruptcy relief is to discharge debt and get a fresh start.
What does it mean to reaffirm your mortgage in bankruptcy?
Reaffirmed Mortgages: In a bankruptcy case, a reaffirmation agreement is a legal contract stating that you promise to repay all or part of a debt that would have otherwise been released once the bankruptcy was discharged. Reaffirming your mortgage means that you are recommitting to the loan and all of its terms.
Do I have to sign a reaffirmation agreement?
The short answer is no, you do not have to sign a reaffirmation agreement for any of your debts. It is completely up to you if you want to reaffirm a debt. The main reason for signing a reaffirmation agreement is if you want to keep a secured asset such as a car or home.
What does reaffirmation mean in bankruptcy?
WHAT IS Reaffirmation. Reaffirmation is a type of agreement a debtor makes with a lender to repay some or all of a debt despite going through bankruptcy proceedings. When a person files for bankruptcy, they do so in order to be relieved of a debt burden they cannot pay. By entering into a reaffirmation agreement,…