After filing for Chapter 7 bankruptcy, much of your debt is discharged. Although you have the option of getting this debt eliminated, you may want to actually keep some of the debt. You can do this by signing a reaffirmation agreement with specific individual creditors.
Bankruptcy Discharge
Before the completion of a Chapter 7 bankruptcy, the bankruptcy court will issue a discharge of your debt. Through this order, all of your discharged debts are no longer applicable. At that point, these creditors can no longer try to collect money from you. This wipes the slate clean, as you are not responsible for the debt again at any point.
Reaffirmation Agreement
A reaffirmation agreement is a document that you can sign with an individual creditor to reaffirm your debt. When you sign a reaffirmation agreement, the bankruptcy discharge has no effect on that particular debt. When you sign this document, you cannot get out of the debt again at any point in the future. You are legally responsible for the debt at that point and filing bankruptcy again on the debt in future is not an option.
Process
The court oversees the process of signing a reaffirmation agreement during the bankruptcy hearing. The bankruptcy judge will want to make sure that you understand exactly what you are getting into. In some cases, creditors will try to get debtors to sign the document without fully explaining what it means. You must finish the reaffirmation agreement before completion of the the bankruptcy discharge.
Why Would You Reaffirm a Debt?
Reaffirming a debt can make sense when it deals with a piece of property that you want to keep. For example, you may want to reaffirm your mortgage and your auto loan so that you can keep your house and car. You might also wish to reaffirm debts to family or friends.
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