Search Site
Menu
Should a Chapter 7 Debtor Ever Sign a Debt Reaffirmation, and Why?

Should a Chapter 7 Debtor Ever Sign a Debt Reaffirmation, and Why?

Chapter 7 bankruptcy can offer you a fresh start by relieving you of the financial obligations you had to your creditors. Although most of your non-exempt property is liquidated during the process to pay off your debt, there may be some property you want to keep, such as real estate or a vehicle. Consequently, there may be some secured loans you don’t wish to discharge in bankruptcy.

Should a Chapter 7 Debtor Ever Sign a Debt Reaffirmation, and Why?A debt reaffirmation allows you to enter into an agreement with the creditor to repay the debt owned on specific assets. Reaffirming a debt can be a beneficial strategy not only for keeping the property but also for negotiating reductions in payments, interest rates or total amounts due.

To enter into a debt reaffirmation agreement, you’ll need to be current on the loan and be able to protect the property’s equity with a bankruptcy exemption. If there is any amount of equity that isn’t safeguarded by an exemption, the property may be sold by the bankruptcy trustee to pay off creditors.

The bankruptcy code has strict requirements that must be met for debt reaffirmations to be enforceable. The agreement must be in writing, signed and entered into voluntarily. A creditor must not have pressured or coerced you into entering into the agreement. If you are represented, your attorney must advise you of any legal ramifications of entering into the debt reaffirmation agreement. If you don’t have an attorney, the court will schedule a hearing to ensure an undue hardship is not imposed by your entering into the agreement.

Although a creditor may request that you reaffirm the debt, you should only do so if you know you will be able to pay the loan and that it won’t create an undue burden. While there are advantages to retaining your property, signing a debt reaffirmation means you will still be responsible for the loan after your bankruptcy case concludes. If you fail to make the promised payments, the creditor is entitled to commence a legal action against you or seek to repossess the property. Additionally, a debt reaffirmation may be canceled in some cases, either before the court issues a discharge or within 60 days of filing the agreement with the court.

With offices conveniently located in Athens, Douglasville, Gainesville, Lawrenceville, Marietta, and Scottdale, Jeff Field & Associates represents debtors in Chapter 7 bankruptcy proceedings throughout the Atlanta metropolitan area and beyond. To schedule an appointment, call 404-381-1278 or contact us online.

Leave a Reply

Your email address will not be published. Required fields are marked *

Videos
Our Attorneys
Client Reviews
  • lawyers
    5.0/5.0

    Mr. Fields and his team of lawyers are the absolute best. They were professional, responded quickly to any emails or phone calls that I made and they worked quickly to get the ball rolling on things. They also made me feel so comfortable and welcomi...

    Read more

    Client

  • lawyers
    5.0/5.0

    My experience during this process was great! Jeff Field & Associates helped me every step of the way and was there if I needed their assistance.

    Read more

    Client

  • google
    5.0/5.0

    I would like to thank Jeff Field & Associates for their help with filing Bankruptcy. This was one of the hardest decisions that I have had to make. They walked me through the process and no matter what questions I had they answered them. They mad...

    Read more

    Rhonda Hays

  • google
    5.0/5.0

    This was a hard thing to do but Chris made it easy and explained everything in a way I understood the process. I would recommend anyone having to go through this to contact this office! Casey was great as well and the communication kept the whole tim...

    Read more

    Beth Carlin

  • google
    5.0/5.0

    The staff made a very stressful situation much easier to cope with. They treated me with kindness and respect. Chris and Laura are very professional and knowledgeable.

    Read more

    Anita York

See all reviews
Contact us

Please fill out the form below and one of our attorneys will contact you.

Quick Contact Form