When to Reaffirm Your Debt
If you are behind on car or mortgage payments, which are classified as secured debt, and you want to keep the property after filing a Chapter 7 bankruptcy, you may be thinking about a reaffirmation agreement. By reaffirming the debt you owe, you are able to keep your vehicle or personal property recently purchased, provided you are able to make the payments.
However, reaffirmation agreements can be complex. To get all the information you need to make a sound decision, speak to the attorneys at Simon Resnik Hayes LLP. Our firm has helped thousands of individuals throughout Southern California achieve debt solutions that work for them. Meet with one of our lawyers to discuss your situation during a free consultation.
How Does a Reaffirmation Agreement Work?
Since home mortgages and car loans are considered secured debt, if you have defaulted on your payments, the lender can take the property from you. With a vehicle, it is referred to as repossession. With a home, it is a foreclosure action.
By reaffirming the debt, you are essentially promising the lender that the debt will not be discharged in bankruptcy. It involves entering into a new contract with the creditor for the remaining amount due.
Should I Sign a Reaffirmation Agreement?
If you wish to keep your house or vehicle, you may need to sign a reaffirmation agreement. However, it is important that you understand that entering into that contract will make you personally liable for that debt, despite your bankruptcy relief. Therefore, it is critical that you can afford the payments established in the new creditor payment plan.
When the Financial Stakes Are High, Get Professional Advice
Reaffirmation agreements only apply if you file a Chapter 7 bankruptcy, not a Chapter 13 bankruptcy. To determine if you are eligible for Chapter 7 bankruptcy, you must pass the means test. Our attorneys will meet with you in a free consultation to answer all your bankruptcy questions.
Take the first step toward financial recovery. Call 310-598-7365 or 888-368-4099, or contact us online. We maintain offices in Los Angeles or Sherman Oaks and serve clients in Los Angeles, San Fernando Valley, Riverside, San Bernardino and Orange Counties.
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