What happens if you sign a reaffirmation agreement?

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 to do if your car loan has a reaffirmation agreement?

You can either pay the lender a lump sum to purchase the car at its current value (called redemption) or enter into a new contract (called a reaffirmation agreement ), which lets you keep your vehicle under much the terms as your original car’s promissory note (although this is negotiable).

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.

How does reaffirming secured debt work in bankruptcy?

Reaffirming Secured Debt in Chapter 7 Bankruptcy. In Chapter 7 bankruptcy, you can keep property secured by collateral (such as your car) by reaffirming the debt. Bankruptcy helps you get out of debt by breaking the contract between you and your creditors.

How does a reaffirmation agreement work in chap 7?

Additionally, when you reaffirm on an installment loan, the creditor will continue to report your payments to the credit bureaus. Caveat: this includes reporting timely payments and late payments! One advantage of reaffirming a debt in Chap 7 is that you can protect your co-signer.

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.

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