What Does Bankruptcy Reaffirmation Mean?
Author: Steve
What does Bankruptcy Reaffirmation mean? It means that your personal liability for that debt will not be discharged in the bankruptcy. If you cannot keep up with the payments, the creditor can retrieve or seek and obtain a judgment against you. Since you just filed bankruptcy, your options are too small for the next few years. You could, however, file Chapter 13 when that option becomes available. Also, reaffirming a credit card does not mean that the creditor has to keep the credit line open after you are discharged. Some will cancel the card and you're still on the hook for the debt and are not rebuilding your credit.
If the bankruptcy court reject your reaffirmation, so long as you remain making the payments on time, the lender will very possibly not repossess the vehicle. Many people have filed bankruptcy and have not signed a reaffirmation agreement, but have continued to make the payments and kept the car. Some federal circuits have lately ruled that this is not supposed to happen, but in others, it is still done relatively often, sometimes as intentional legal strategy. If you have further questions about how this works in your Federal Circuit, ask your attorney.
It is a legally imposed written contract in which a Chapter 7 debtor agrees to repay all or part of debt that may otherwise have been discharged by the bankruptcy court. Mostly, debtors are concern with reaffirmation agreements on home loans. This is possibly due to a misinterpretation or misunderstanding by the real estate industry in applying the new bankruptcy laws improperly to real estate loans. With the advent of the new Bankruptcy Laws of 2005, it was expected that “Ride Thru” was reduced.
If the debtor chooses to reaffirm a debt, he or she must do so before the discharge is entered. The debtor must sign a written reaffirmation agreement and file it with the court. The Bankruptcy Code needs that reaffirmation agreements contain a wide set of disclosures. Among other things, the disclosures must inform the debtor of the amount of the debt being reaffirmed and how it is calculated, and that reaffirmation means that the debtor's personal liability for that debt will not be discharged in the bankruptcy.
The disclosures also make the debtor to sign and file a statement of his or her current income and expenses which shows that the balance of income paying expenses is enough to pay the reaffirmed debt. If the balance is not enough to pay the debt to be reaffirmed, there is an assumption of undue hardship, and the court may decide not to grant the reaffirmation agreement. Unless the debtor is represented by an attorney, the bankruptcy judge must approve the reaffirmation agreement.
A reaffirmation agreement in bankruptcy is a new contract signed between you and a lender that reaffirms your debt and personal responsibility for the obligation. Such an agreement is typically executed for secure property such as an automobile, an airplane a boat, or a recreational vehicle like a motor home. Before signing an agreement of this type, it is a good idea to have it checked over by your attorney as it is a binding legal document. The reaffirmation agreement must also be accepted by the court. You can repeal it within 60 days after signing. To know more on how to file bankruptcy, visit http://www.onlinebkassist.com.
Article Source: http://www.articlesbase.com/finance-articles/what-does-bankruptcy-reaffirmation-mean-1548829.html
About the Author
Steve Young is the author of The #1 Secret On How To File Bankruptcy. To get your free CD on How to File Bankruptcy Without an Attorney, go to http://www.onlinebkassist.com
Do you have to file a reaffirmation agreement in Chapter 7 bankruptcy for secured creditors?
We are filing Chapter 7 bankruptcy and want to discharge all unsecured debt, but we are current on home and car and will continue to make those payments. We will have to fill out a B240 reaffirmation agreement on these or just fill out the Chapter 7 Debtor intent form that says we will reaffirm?
Why is Reaffirmation usually bad after bankruptcy?
I know home loan lenders won’t report good credit without a reaffirmation but why? If the home wasn’t included in bk and/or your payments were never late……
I file for bankruptcy and received a reaffirmation letter from auto loan credit union.?
Is it required to sign the reaffirmation letter as I am still paying my car on a monthly basis it is the only liability I have and I still owed the car.
Any advise!
Question about reaffirmation agreements and bankruptcy?
If the bankruptcy court deny your reaffirmation agreement with a car company, how long is the turnaround from the time the court deny you until you have to release the property back to the company?
I have a car in Reaffirmation from my bankruptcy.Should the bank be posting my payments on my credit score?
Supposedly I should say. They sent me paperwork to reaffirm the loan. I was to sign the agreement and return before the bankruptcy was final. Something I forgot to do. I called them two months ago and they said it wasn’t in reaffirmation so I told them to come pick the car up. Now there saying it is in reaffirmation. How is that possible when I never sent them back there papers of the agreement signed. Are they just trying to put the screws to me or do I owe them this money?
The court has to approve reaffirmation agreements in bankruptcy.
If you never signed the papers and returned them, and the court didn’t approve the reaffirmation agreement, then you did not reaffirm the debt.
For many years if you didn’t sign a reaffirmation agreement but kept making the payments, you could keep the car. But recent court decisions have said that if there is no reaffirmation agreement the bank can repossess the vehicle whether or not you keep making the payments.
If the bankruptcy court denied your reaffirmation, so long as you keep making the payments on time, the lender will very likely not repo the vehicle. Many many people have filed bankruptcies and have not signed a reaffirmation agreement, but have continued to make the payments and kept the car.
Some federal circuits have recently ruled that this is not supposed to happen, but in others it is still done quite often, sometimes as a deliberate legal strategy.
If you have further questions about how this works in your Federal Circuit, ask your attorney.
Reaffirmation agreement is for unsecured creditors whereas the Statement of Intention is for secured Creditors like car, and house. The Statement of Intentions is the proper place to “show” intentions to creditors and the Court regarding this debt.
See Nolo’s Chapter 7 Bankrutpcy book which is in many public libraries.
Good Luck
You most likely agreed to sign this when you filed or you would not have received this letter.
It is not required to sign them as long as you continue to make the payments your lender will allow you to keep the vehicle.
But, if you don’t sigh it and request that your lender continue to report to the credit bureaus making the payments will not show on your credit report.
This is the fastest way to reestablish your credit after your BK discharges.
All debts must be declared in a bankruptcy, the only way for a lender to continue to report is if you sign a reaffirmation agreement and even then you must call them and request that they continue to report.
Reaffirmation agreements are the best way people can re-establish their credit after a bankruptcy.