7 Great Reaffirmation Questions About the Bankruptcy Process

English: Part of Title 11 of the United States...

English: Part of Title 11 of the United States Code (the Bankruptcy Code) on a shelf at a law library in San Francisco. (Photo credit: Wikipedia)

Bankruptcy questions abound from bloggers who want to learn more information about the bankruptcy process. Literally, thousands of pages have been written in answer to these type of questions on bankruptcy forums around the internet. Here are 7 great reaffirmation questions that have been asked about the reaffirmation process, with a few simple words or sentences answering them.

  1. What is reaffirmation in the bankruptcy process? Reaffirmation is when a filing debtor voluntarily and formally agrees to relinquish his or her right to bankruptcy discharge of a secured asset during the bankruptcy process so that the creditor will not repossess or foreclose on the secured property.

  2. Is is wise to sign a reaffirmation agreement if you want to keep an asset? Many bankruptcy lawyers will refuse to sign off on a reaffirmation agreement or advise their client to sign them because discharge of debt is why you file for bankruptcy protection. Things can change down the road for a filing debtor after bankruptcy, and there is little recourse after you have given up your right to discharge.

  3. If you do not reaffirm an asset like your car, will they repossess it? If you do not reaffirm an asset in the bankruptcy process, some creditors have the policy to automatically repossess the asset, some creditors will not repossess if you keep up your payments, and some state laws prevent the creditor from repossession if you keep up your payments.

  4. Is it the law that you have to participate in offering the opportunity of reaffirmation during the bankruptcy process? Some states laws require you to attend a reaffirmation hearing the creditor is invited to also attend. This meeting allows both of you the opportunity to reaffirm your assets to prevent foreclosure or repossession. Normally, if you attend the meeting but do not sign the reaffirmation, the creditor cannot foreclose or repossess if you make your payments on time.

  5. Does a bankruptcy judge have to sign off on a reaffirmation agreement before it is legal? If your bankruptcy lawyer refuses to sign the agreement with you, a bankruptcy judge must approve a reaffirmation before it can become a legal document.

  6. Can you renegotiate or modify a loan contract without a reaffirmation during the bankruptcy process? During the bankruptcy process, a secured creditor has the right to petition the bankruptcy court to remove the effects of the automatic stay if you default on your payments. That means you can be foreclosed or repossessed on during the course of the bankruptcy process. Unfortunately for the debtor, many creditors will not renegotiate or modify a loan contract until the debtor has defaulted on a loan. Some say they will, but historically, there is little evidence to support that point of view.

  7. Is there a time limit on when an reaffirmation agreement must be signed? Yes, the 2005 bankruptcy law changes state that any reaffirmation agreement must be entered into prior to the filing of a discharge in bankruptcy.

Before you enter into any reaffirmation agreement, it is a good idea to consult with an experienced bankruptcy lawyer.

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