Reaffirmation Agreements in Chapter 7

After filing for Chapter 7 bankruptcy, a creditor may ask you to “reaffirm” a particular debt, or you may choose to reaffirm debt yourself. A “reaffirmation agreement” made between you and a creditor, and enforced by signing a legally-binding document, states that you will pay some or all of a debt which may otherwise have been dischargeable in order to keep certain property. These agreements are typically made and filed within sixty days after your “meeting of creditors.”Reaffirmation agreements are usually made for property you intend to keep after bankruptcy, such as your home or car (if these are not covered by your exemptions), and will allow you to continue paying down the debt month-by-month as if you hadn’t filed for bankruptcy. However, failure to reaffirm or redeem certain property (or defaulting on a loan for reaffirmed debt)may not only result in losing the property, but also being subject to legal action and wage garnishment from the creditor with which you made the agreement.A “redemption,” which differs from reaffirmation, would require you to pay the value of your collateral to a creditor within a certain period of time, after which time the creditor will no longer have a lien against you and you will fully own the collateral once again. Speak with a bankruptcy attorney for more information on reaffirmation and redemption.If you are struggling financially and considering filing for Chapter 7 bankruptcy, you’re not alone. Contact an experienced bankruptcy attorney today for a free consultation.