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For most people, discharging their debts and walking away without those obligations hanging over their heads is the reason they file for bankruptcy. However, there are situations where it might benefit you to agree to continue paying certain debts, especially when they are secured by property you own.
Reaffirmation agreements in Grand Rapids Chapter 7 bankruptcy allow you to maintain these obligations, as long as your creditor agrees. This can work out in your favor if you are current on your car note or mortgage and want to keep that property. Let our dedicated bankruptcy attorneys help you determine whether this option is right for you.
A reaffirmation agreement is a voluntary contract made during a Chapter 7 bankruptcy that allows a debtor to keep certain secured debts by agreeing to continue paying them after the bankruptcy is complete. In essence, the debtor reaffirms their obligation to pay the debt, even though it could have been discharged. This agreement must be approved by the creditor and sometimes by the bankruptcy court, especially if the debtor is not represented by an attorney.
Reaffirmation agreements are most common when the debtor wants to keep a vehicle or home and is current on payments. By reaffirming, the debtor keeps the property and avoids repossession or foreclosure. However, reaffirming a debt comes with risk. If you fall behind after your bankruptcy concludes, you remain liable on that obligation and cannot discharge those debts as if you were still in bankruptcy. Given these risks, it is a good idea to discuss the feasibility of a Chapter 7 bankruptcy reaffirmation agreement with a Grand Rapids attorney.
There are a few reasons why people in Grand Rapids choose reaffirmation agreements during the Chapter 7 bankruptcy process. For many, it is simply about remaining in their home or keeping the vehicle they need to get to school or work.
In other cases, debtors might see this as an opportunity to rebuild their credit faster. It is difficult to get a credit card or loan after a bankruptcy discharge, which in turn makes it harder to improve your credit score. Making your car payments on time as soon as your bankruptcy ends can speed up this process.
It is important to remember that reaffirming a debt is not always a good idea. Before you agree to anything, discuss your options with an attorney.
If you decide that reaffirming your debt during a Grand Rapids Chapter 7 bankruptcy is the right move, the first step is to say so in your bankruptcy forms. This is done by indicating your plan to reaffirm a debt in a document known as the Statement of Intentions.
Keep in mind, this process is only viable if the creditor is willing to enter into an agreement. In some cases, they may simply prefer to pursue removing the asset from the protection of the automatic stay before repossessing it. If the lender is on board, your attorney will need to draft a reaffirmation agreement and complete additional forms. Finally, the court will have to approve of the agreement, which typically requires a formal hearing.
Before you make any kind of agreement with a creditor, it is in your best interest to discuss your options with our team of attorneys. Reaffirmation agreements in Grand Rapids Chapter 7 bankruptcy can be beneficial in some cases, but it may not be right for you. Reach out to our firm as soon as possible for help with weighing your options, and fill out our online debt calculator for more immediate insight.
We have locations available by appointment in the following areas. Please call us to speak to an attorney and set up an initial meeting.
We are a debt relief agency helping people file bankruptcy under the United States Bankruptcy Code.
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