Keeping Some Property By Agreeing To Pay The Bill
Bankruptcy plans, particularly those under Chapter 7, often involve getting rid of property. Sometimes people have property that they want to keep. The most common example is a car, due to the necessity of transportation. You may be able to keep your car or other property through debt reaffirmation.
At the law firm of Marcus H. Herbert & Associates in Paducah, Kentucky, you will find a team who understands all aspects of Chapter 7 bankruptcy and Chapter 13 bankruptcy. We can work with you to help you determine if debt reaffirmation is a good idea or if you should pursue another option.
What Is Debt Reaffirmation?
During Chapter 7 or any other type of bankruptcy, contracts are automatically broken. Debt reaffirmation creates a new contract with your creditor. That contract will allow you to keep your property, but it will also make you liable for all remaining debt.
Creditors are very happy with this type of agreement. In fact, they often encourage it. This is because they will usually end up being paid more than they would be otherwise. The car lien passes safely through the Chapter 7 or Chapter 13 bankruptcy process, which means the creditor can still repossess the car if you fail to make payments on it.
Even worse, reaffirmation agreements can limit the effectiveness of a bankruptcy and keep you in debt even after the bankruptcy process is finished.
Will the Court Allow Debt Reaffirmation?
Since reaffirmation agreements can have such a negative impact on the overall bankruptcy process, the court is usually very hesitant to approve them. They may reject reaffirmation agreements that involve home electronics, boats or other non-essential items. However, they are often willing to approve them for cars and homes.
Attorney Marcus H. Herbert will take the time to carefully review your options with you. We want you to understand the possible outcomes of every choice you make. We want to do what is right for you.
A Free Consultation About Reaffirming Debts
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.