Can You Reaffirm Only One Home in a Bankruptcy if You Own Two?

A reaffirmation agreement in United States bankruptcy law refers to an agreement made between a creditor and the debtor that waives discharge of a debt that would otherwise be discharged in a pending bankruptcy proceeding.

The results of a reaffirmation agreement between a secured creditor and the filing debtor is that the debtor is guaranteed against in future seizures or foreclosures on the property as long as he or she makes timely payments.

Concerning reaffirmation, this personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “Can you reaffirm only one home in a bankruptcy if you own two?”

The answer to the question is that it depends on what type of bankruptcy you file, the amount of equity you have in each home, state and federal exemptions, and the US Bankruptcy Court trustee.

There are basically two types of bankruptcies most individuals can file- a Chapter 7 or a Chapter 13.

If you file a Chapter 13 bankruptcy, a wage earner’s plan that enables you to keep your assets by devising a three or five year plan to pay off your debts, you will have the choice to reaffirm either of the homes.

A Chapter 7 bankruptcy, commonly called liquidation, is where non-exempt assets are liquidated to pay off your creditors. You may not have a choice about reaffirmation on either of the two homes in a Chapter 7, depending on the circumstances and the bankruptcy trustee.

If either of the homes has equity and the equity is not protected by an exemption, the home may be sold to satisfy unsecured creditor claims. The bankruptcy court trustee decides whether or not there is enough equity to warrant the liquidation of the asset. If a home is liquidated, obviously, you cannot reaffirm the contract.

If neither home has equity, the bankruptcy court will allow you to reaffirm either or both of the homes under a Chapter 7 bankruptcy. The bankruptcy court trustee may also allow you to reaffirm a home with equity if he or she decides not to liquidate the home.

Can you reaffirm only one home in a bankruptcy if you own two? Yes, it is possible, but many bankruptcy lawyers will tell you it is not a good idea to reaffirm a debt when you file for bankruptcy. If you waive the discharge on a given asset, you cannot claim the asset in a bankruptcy case up to eight years after the bankruptcy closes.

Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how reaffirmation rules may apply in your particular situation.

If you live in or around the metropolitan areas of Providence, Fall River, or Warwick, Rhode Island and Maine, contact us here today at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.

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