When you file a Chapter 7 bankruptcy case, as a part of your petition, you also file a statement of intention with respect to property that is secured by consensual liens. That means that you have to inform the bankruptcy court here in Rochester what you intend to do with such property, such as your home that has a mortgage, your car, if it has a loan associated with it that is secured by a lien, or any other property in which your creditor has a valid security interest. You are given a choice of whether to continue to pay on such obligations or to, if you do not wish to sign a reaffirmation agreement, to allow the creditor to take the property back. A reaffirmation agreement in bankruptcy is a new contract signed between you and a lender that reaffirms your debt and personal liability for the obligation. The law requires you to “perform” your intentions regarding financed personal property within 45 days of the Meeting of Creditors (341 Meeting) or the automatic stay terminates. Before signing a reaffirmation agreement, it is a good idea to discuss it with your bankruptcy lawyer as it is a binding legal document. You can revoke it within 60 days after signing. It is not difficult to revoke the reaffirmation agreement since all that is needed, is a letter saying “I don’t want this agreement”, with the letter being sent to the court and to the creditor.
The Bankruptcy Reform Act of 2005 (“BAPCPA”) states that any reaffirmation agreement(s) must be entered into prior to the filing of a discharge in bankruptcy. The reaffirmation agreement must also be approved by the court and not rescinded by the debtor prior to the discharge being filed. The court can also refuse to sign the reaffirmation agreement, if it is of the opinion that the debtor cannot afford the payments called for under its terms. Some lenders state they will repossess vehicles unless the debt is timely reaffirmed. Other lenders feel that it is better to receive monthly payments rather than lose money by selling repossessed vehicles at auction prices.
As a debtor, there is little risk in signing a reaffirmation agreement provided that you feel you really need the property (such as a car or a home) and you know you can afford the payment.
If you are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a bankruptcy attorney.