What Is A Reaffirmation Agreement?
A reaffirmation agreement is a renewed agreement between a debtor and a creditor. When you file for Chapter 7 Bankruptcy, you are obtaining a discharge of your debt by liquidating your non-exempt assets and using the money to pay off your creditors. A reaffirmation agreement can be used to ensure you are allowed to keep a particular asset by reaffirming the debt and your personal liability to pay the debt according to the terms of your contract.
Once your bankruptcy is complete, you will still be required to adhere to the terms of your reaffirmation agreement. If you do not, the creditor has the right to begin collection actions against you, including repossessing the collateral on the loan (i.e. your car).
If you are considering entering into a reaffirmation agreement with a creditor, you should discuss your options with your bankruptcy attorney prior to signing. In some instances, you may be able to keep your property without entering into the agreement. Additionally, the agreement must be approved by the court.
Before approving your agreement, the court will want to make sure you have the capabilities to repay the renewed debt. If the court does not believe you can meet the terms of the new agreement, the court may refuse to approve it. To ensure you understand how a reaffirmation agreement could affect your bankruptcy proceeding, please discuss the matter with a qualified Cincinnati bankruptcy attorney.
For more information, contact Ohio bankruptcy attorney Kathleen Mezher now.