A bankruptcy reaffirmation is a contract you might decide to sign with a creditor that will stop that debt from being discharged. Usually, when someone files for bankruptcy under Chapter 7, they want to have all or the majority of their obligations discharged. However, in rare circumstances, a person who files for Chapter 7 bankruptcy may choose to keep a debt.
Consult with your lawyer before deciding whether to sign a reaffirmation agreement. Here are some advantages and disadvantages of signing a reaffirmation agreement, though.
In most cases, when you sign a reaffirmation agreement, you may bargain for better terms. You could have to make fewer payments, pay a lower interest rate, or pay the creditor less overall, for instance. Therefore, a reaffirmation may be a suitable alternative if you feel that you have the means to pay off the sum in full and that you may obtain better conditions.
Your signature can be required by a creditor. It could also be the best strategy to preserve assets or collateral. As a result, by making your payments on time, you avoid having your property sold by a bankruptcy trustee.
Before signing anything, keep in mind that you should consider all of your alternatives and consult an attorney.
The biggest drawback of confirming a debt is that it results in continued debt after filing for bankruptcy.
Furthermore, even if the item is destroyed or damaged, you are still responsible for the payments. If you don’t make a payment on time, the creditor has the right to seize your property, sell it, and then charge you for any unpaid balance. Additionally, if you are currently in arrears with any payments, you cannot get into a reaffirmation arrangement.
The acclaimed Recovery Law Group can be contacted if you’re seeking for legal representation and advice for filing for bankruptcy. To schedule a consultation, visit https://recoverylawgroup.com/bankruptcy/.