Keeping Your Home in Bankruptcy-Reaffirmation Agreements

Bankruptcy reaffirmation agreementsBankruptcy reaffirmation agreements are a great option in your case. When you file Chapter 7 bankruptcy, there are some creditors that you may wish to continue paying.  The most typical example is your Home mortgage or auto loan.  Generally these are debts that secure exempt property such as your home or auto.

Under the Bankruptcy Abuse Prevention and Consumer Protection Act there are 3 ways to handle debt on a secured asset:

  1. Surrender the collateral
  2. Redeem the collateral – make an agreed upon lump sum payment to the creditor allowing you     to keep the asset
  3. Reaffirm the debt – agree to continue paying the debt and keep the exempt asset

If you want to keep your auto or home, reaffirming the debt is the most common. Once you file your bankruptcy creditors get notice. At this point they will send us the bankruptcy reaffirmation agreements.  Some creditors automatically send the agreement, but others wait until you request it.  Occasionally there are creditors that don’t send bankruptcy reaffirmation agreements. Rather they just allow you to continue making payments until the debt is paid off.  A common reason is the balance is so low that it will be paid off in a short amount of time. Another reason is the creditor is not familiar with the procedures for preparing a reaffirmation agreement.

Your attorney can complete their portion of the agreement upon receipt of a reaffirmation agreement. You will also have to review and sign the agreement.  The court must approve bankruptcy reaffirmation agreements. Once accepted by the court the relationship with your creditors continues as before. The creditor will typically resume sending you monthly statements. They will also report your payment history to the credit bureau.  In Oklahoma the deadline for filing a reaffirmation agreement is 60 days after your 341 Meeting of Creditors.

Reasons To Sign A Reaffirmation Agreement:

Clients often wonder “Why should I sign a reaffirmation agreement?”  There are many reasons that a reaffirmation agreement can be in your best interest.  With a reaffirmation agreement, you can start to rebuild your credit history because your payment history will be reported to the credit bureaus.  Some creditors will only send monthly statements if you have reaffirmed the debt—this can make management of your loan easier with a reaffirmation agreement on file.  Sometimes a creditor will be willing to allow you to reaffirm debt at a lower amount or interest rate.  This happens most often with debt that has an extremely high interest rate. With a valid reaffirmation agreement on file, you will usually be able to work with lenders if you run into a situation that makes payment of your debt difficult.

Contact Us About Bankruptcy reaffirmation agreements:

Deciding which debts to reaffirm is important.  You should discuss it with your attorney before filing your case. For a Free and Confidential consultation with a bankruptcy attorney from South Tulsa Bankruptcy call today! We will talk to you about your case today and meet with you that same day if you need.

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