Should I sign a reaffirmation agreement in my Minneapolis Chapter Seven Bankruptcy case?
It is common for a lender to send you a “reaffirmation contract” when you are going through bankruptcy. These agreements are usually sent by lenders to whom you have secured loans, such as a mortgage or car loan. These agreements are basically written requests to exclude a debt from bankruptcy discharge. If you decide to sign a reaffirmation contract, it will be filed with the court and a judge will determine if the debt should be reaffirmed, and excluded from bankruptcy discharge.
In the light of these facts, you may wonder whether it’s in your best interest to reaffirm secured loans for items that you want to keep or whether it’s necessary to reaffirm to avoid repossession. In most cases, reaffirmation will not be necessary. Many lenders, such as most mortgage lenders will allow you to continue making payments on the loan even after bankruptcy discharge. Some lenders require reaffirmation in order to keep a vehicle following bankruptcy discharge. However, this is not the case for most.
You may also wonder what benefit there is to not reaffirming a debt if you want to continue paying it. The biggest benefit is that you will no longer be able to collect the debt after the bankruptcy. Once the discharge is complete, the lender can no longer bill you or contact you.
Apart from this, the lender cannot pursue you for any deficiency after the discharge. In the case of a hypothetical vehicle loan, the lender will never be able sue you to recover the original loan amount once the discharge is complete. If you ever decide to return the car to the lender in the future (for example, if the car breaks down, or is totaled by an accident), you can call the lender and ask them to pick it up. You are then free to walk away without having to pay any remaining car payments.
CALL NOW FOR A FREE STRATEGY SESSION FROM AN MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
Determining the best path forward with regard to the treatment of a loan in the bankruptcy process can feel like a little bit of challenging prospect sometimes. Our firm has a wealth of experience in interpreting the reaffirmation procedure and providing advice. We would be happy to speak with you to discuss how it may impact your specific circumstances. So, when the time is right, or when you are ready, please don’t hesitate to reach out to Minnesota’s most kind and helpful bankruptcy law firm by going now to www.lifebacklaw.com.
