How Reaffirmation Agreements Work Reaffirmation agreements are filed with the U.S. bankruptcy court to demonstrate a written acknowledgment of new debt. These contracts are typically written by bankruptcy lawyers for the creditor.
Can a judge deny my reaffirmation agreement?
Yes, a Judge can deny a reaffirmation agreement even if it is a voluntary agreement between lender and borrower. We discussed the basics of reaffirmation agreements in this post , and we also have posts about car reaffirmations and house reaffirmations .
What should I expect at my reaffirmation hearing?
- What do you think your car (or other property) is worth?
- Can you afford to make the monthly payments under the reaffirmation agreement?
- Has your income or expenses changed since filing your case?
- Do you receive help from your friends or family to make the payments on this debt?
- Have you ever missed a payment on this debt?
Should you reaffirm a mortgage in bankruptcy?
You can’t reaffirm your mortgage once the bankruptcy case is over without jumping through some additional hoops. You’re going to need to make a motion to the bankruptcy court to reopen your case for the limited purpose of entering into a reaffirmation agreement. Some courts will allow you to do so, others will not permit it.
Can I reaffirm my mortgage in a Chapter 7 bankruptcy?
Rather than voluntarily making payments on the mortgage after you file your Chapter 7 bankruptcy case, you or your lender may look at a process called reaffirmation. Reaffirmation is a legal term, but it loosely means a new promise to repay a debt after bankruptcy that otherwise would be wiped out.
What happens when you reaffirm a debt?
When you reaffirm a debt, you agree that you will still owe it after your bankruptcy case ends. Both the creditor's lien on the collateral (which gives the creditor the right to take the property if you fail to pay as agreed) and your liability to pay the debt will survive bankruptcy intact.
What happens after a reaffirmation agreement?
Once the court has approved the reaffirmation agreement, the filer's personal liability on the car loan survives the entry of the discharge. If all remaining payments on the loan are paid in full, then it's essentially as though the bankruptcy never happened.
Does reaffirmation help credit?
Reaffirming Helps Rebuild Your Credit So timely payments won't help you establish a good credit history after bankruptcy. If you reaffirm the loan, your lender will continue reporting payments.
What is the purpose of a reaffirmation agreement?
What Is the Purpose of a Reaffirmation Agreement? A reaffirmation agreement is a written contract between the debtor filing Chapter 7 bankruptcy and the lender or creditor. When the debtor signs the reaffirmation agreement, they agree to repay the debt on the loan to keep the property, usually a house or car.
Can a creditor refuse a reaffirmation agreement?
Reaffirming puts you personally on the hook for the debt, even after your discharge. The Court may not approve the reaffirmation if it is not in your best interest. The agreement is voluntary for you and for the creditor—the creditor may refuse to offer a reaffirmation.
What happens at a reaffirmation hearing?
What Happens at a Reaffirmation Hearing? At the reaffirmation hearing, the judge will explain any concerns he or she has with the terms of your agreement. In addition, the judge will ask you certain questions to determine whether reaffirming the debt is in your best interest.
Can you negotiate a reaffirmation agreement?
Throughout the reaffirmation process, you may be able to negotiate more favorable terms. Reaffirmation is a new contract between you and the creditor, and need not mirror the terms of your original agreement.
Can I reaffirm debt after discharge?
No creditor can make you reaffirm a debt. This is because a reaffirmation goes against the most basic upside of filing bankruptcy: the fresh start. You cannot be sent to collections, sued, or garnished on a debt that was discharged in bankruptcy.
Can I refinance my mortgage if I did not reaffirm?
The truth is that you do NOT have to reaffirm your loan to refinance. There is no law that says anything like that. The hurdle is not a law, it is just the bank's policy. They may have chosen not to offer to refinance to people who chose not to reaffirm.
What happens if you default on a reaffirmation agreement?
You will be stuck with the payments. If you can't make the payments, the creditor can repossess the property in which it has a security interest (the collateral), can sell it, and may sue you for a judgment for the difference between the amount that is receives on the sale and the amount that you owe on the loan.
What is meant by reaffirmation?
Definition of reaffirmation : a second or subsequent affirmation : the act of reaffirming something or the condition of being reaffirmed a reaffirmation of the country's founding principles Her announcement Friday served as a reaffirmation of her desire to continue in that instrumental role …—
What is reaffirmation date?
Reaffirmation Date means (i) each Addition Date and (ii) the date of any Increase in any Class of any Series of Notes.
Can I keep my car without reaffirming?
Despite what you might have been told by your creditors, you may not have to sign a reaffirmation agreement on your car loan in order to avoid repossession or to rebuild your credit score after filing for bankruptcy.
What is reaffirmation of mortgage?
Reaffirming your mortgage means that you file paperwork that states that you affirm this debt regardless of your bankruptcy discharge. That protects your lender from losing out on the money they have invested in the property, and it also allows you to retain your ownership in the home and your accumulated equity.
What is a reaffirmation agreement for student loans?
Agreeing to repay the excess loan amount in accordance with the terms of the promissory note is called “reaffirmation.” You can reaffirm an excess loan amount by signing a reaffirmation agreement with your loan servicer.
What is meant by reaffirmation?
Definition of reaffirmation : a second or subsequent affirmation : the act of reaffirming something or the condition of being reaffirmed a reaffirmation of the country's founding principles Her announcement Friday served as a reaffirmation of her desire to continue in that instrumental role …—
Represented by an Attorney
YouTube Several parties must agree to a reaffirmation in order for it to be approved as part of the bankruptcy proceeding. It is recommended to have your bankruptcy attorney represent you in handling the reaffirmation agreement even though there is normally an extra charge. However, the attorney fees for a reaffirmation agreement are well spent.
Reaffirming your mortgage
A creditor or lien holder will most often agree to the reaffirmation under the current terms. We have seen reaffirmation agreement which offered the debtor a better interest rate or lowered the loan balance. However, in most cases you just reaffirm the loan under the current terms.
Private loans, reaffirming unsecured debts
Sometimes, clients wish to reaffirm a credit or store card. This is not easily done because a credit card company does not a have a proceeding in place to reaffirm an unsecured debt. Normally, the credit card company will cancel the debt.
What is a Reaffirmation Agreement?
A reaffirmation agreement is a contract that you can enter into in which you agree to remain responsible for a debt so that you can keep the property. In other words, it’s a promise to pay in exchange for keeping the property you are seeking to retain. In order to be able to enter into a reaffirmation agreement you need to be current on your payments, and any equity in the property must be fully protected by your exemptions. Typically reaffirmation agreements in chapter 7 cases are for a car.
Is a reaffirmation agreement binding?
A reaffirmation agreement is a binding contract, and as such you should give careful consideration to the costs and benefits prior to entering into one.
Can a creditor compel a reaffirmation agreement?
Reaffirmation agreement are strictly voluntary and cannot be compelled by the creditor to enter into such an agreement. Any agreement needs to be entered into and filed prior to receiving your discharge at the end of the case to be valid.
Can a chapter 7 reaffirmation agreement be compelled?
Typically reaffirmation agreements in chapter 7 cases are for a car. Reaffirmation agreement are strictly voluntary and cannot be compelled by the creditor to enter into such an agreement. Any agreement needs to be entered into and filed prior to receiving your discharge at the end of the case to be valid.
