13:26 23 March in Bankruptcy



Can debt reaffirmation help you?  Bankruptcies can be complicated, and no two cases are exactly the same.  They are a powerful tool, and when properly used, they can help people get out from under crushing debt.  However, if you are filing then you should expect to lose at least some of your assets.  Sometimes this can mean the lose of a car, a home, or other valuable assets.  Of course, there are exemptions in place which can protect certain kinds of assets in certain kinds of situations, but due to the complexity of bankruptcy law, an individual without experience should not rely on these.

This is yet one more reason why we always recommend speaking to a knowledgeable bankruptcy attorney before making the decision to file.  Experienced counsel can make all the difference in the world for you and your family.

What is Debt Reaffirmation?

Debt reaffirmation is a tool which can protect assets from being repossessed and sold during a bankruptcy.  Usually, debt reaffirmation is something which occurs in a Chapter 7, but can be useful in a Chapter 13 as well.  But how does it work?  It is, simply put, the process by which you voluntarily chose to reaffirm a debt.  It sounds self-explanatory, but there is more to it than you might think.

Debt Reaffirmation Process

If you mean to reaffirm a debt, then you will need to go before the bankruptcy court and ask to have certain assets removed from your bankruptcy estate.  You do this my promising to pay the original debt, usually under the original terms.  Many people choose to reaffirm the debt owed on a car loan to keep the vehicle from being repossessed.  Appliances, furniture, and jewelry are other assets which are commonly brought up when filers are considering debt reaffirmation.

However, debt reaffirmation is not something which automatically happens.  Just because you want to reaffirm the debt on your car doesn’t mean that the court will let you.  Ultimately, it is up to the bankruptcy court to decide whether to allow the debt reaffirmation or not, and it will make this decision based on several factors.  These include your income and expenses.  If the bankruptcy court decides that you are actually capable of making your original payments, then it may allow you to reaffirm the debt.

If the court allows you to reaffirm the debt, then you will be given 60 days to accept or decline.

Once a debt is reaffirmed, the filer will once again become responsible for the original debt.  You will be required to make regular payments on this debt as if you were not in a bankruptcy at all.  However, as long as you continue to make those payments, the asset in question cannot be repossessed.

Contact Us For More Information On Bankruptcies

If you have questions about bankruptcy and how it can affect you, please feel free to contact our offices.  We would be happy to schedule you a free consultation with a bankruptcy attorney.