If you have recently filed for personal bankruptcy, you may have received something called a reaffirmation agreement from one of your creditors – from your mortgage company, your car lender, or any other creditor whose loan financed the purchase of some property. In some cases, a reaffirmation agreement is required to keep the property at issue; in others, it may be a poor idea to sign. As personal bankruptcy lawyers in Plano TX, the attorneys at Collins & Arnove have the experience necessary to review reaffirmation agreements and advise their clients about whether to enter into such agreements and whether such agreements are necessary.
What is a Reaffirmation Agreement?
When you buy property on credit (such as a house or a car), the lender often takes a security interest in that property. For example, when you buy a house and obtain a mortgage loan, the mortgage lender will obtain a lien on your house, so that if you do not pay your mortgage, the lender can foreclose, taking the house because you defaulted. Similarly, a car lender can repossess the car if you do not pay the loan, provided the lender took a security interest in the vehicle. When you file Chapter 7 bankruptcy, you have three choices with regard to property that secures a loan: you can surrender the property, which means you get rid of the loan, but you also give up the item; you can redeem the property, which means you pay a lump sum to the lender to pay for the property in full; or you can reaffirm the debt, which means you agree to repay the loan as if you had never filed Chapter 7 in the first place. This is where the reaffirmation agreement comes in. It is a contract whereby you agree that you will be responsible for the debt just as you were before you filed your bankruptcy case; in return, you will get to keep the property that secures the loan – your house, your car, your washer and dryer, or whatever it is that you pledged as collateral. For example, if you have a car loan and you file bankruptcy, but you want to keep your car, you can sign a reaffirmation agreement stating you will continue to make your payments.
Why Talk to a Bankruptcy Attorney Before Signing a Reaffirmation Agreement?
A reaffirmation agreement can be a good thing or a bad thing, depending upon your situation. Whether you should sign depends upon whether your payments are reasonable and whether the property in question is necessary for you to support yourself. If your income is not enough to make the payment, you may have to go to court to explain to the judge why you need the reaffirmation agreement. Further, some creditors ask for a reaffirmation agreement but do not require one, and you can continue to pay without signing; others will repossess the property if you do not sign, whether you are current on your payments or not. Never sign a reaffirmation agreement without first speaking to a personal bankruptcy lawyer. Plano TX bankruptcy law firm Collins & Arnove have the knowledge and experience necessary to advise clients regarding reaffirmation agreements.
Contact our Personal Bankruptcy Lawyers in Plano TX Now
Whether to sign a reaffirmation agreement is an important decision. To discuss whether reaffirming debt is right for you, call Collins & Arnove now at (469) 808-0632.
Collins & Arnove | Personal Bankruptcy Lawyer Plano TX | 972-516-4255