Reaffimation of Debt
Reaffirmation of debt is an agreement between the debtor and the creditor under which the debtor agrees to pay a debt that would otherwise be discharged. As soon as the debtor agrees the contract, then he is waiving his right to discharge with respect to the debt.
Before doing so it is very important that have a clear perspective regarding the things that are involved in signing a reaffirmation agreement. Bear in mind that this agreement is only applicable if you have filed for Chapter 7 personal bankruptcy. The main purpose of filing a bankruptcy is to discharge you debts, then why would someone want to be responsible with the debts again?
Reaffirmation of debt is the best way to do if you wish to keep your home, cars, or other debts. You need to prepare separate agreements and verify the terms and conditions that are included with your creditors. The creditor must provide the debtor with disclosure statements containing information set out at or before the time of signing the agreement. The agreement must specify the amount to be affirmed, the amount of fees/costs, and the annual percentage rate. That is why it is very important that you do make up your mind and evaluate the debt that you need to reaffirm.
Primarily, reaffirmation of debts is bringing back your obligations (debt) that you put to rest with your personal bankruptcy. But there is a drawback in doing so, if you agreed for the reaffirmation of your debts and failed to make up with the payments under the reaffirmation agreement, then the creditor will have a right to come after you or can make actions against you to take away the property and you will be the one responsible for the remaining debts. The creditor then will have the legal rights against you and he can also file a case against you which will include the repossession of any property that is secured by the debt. This is a reason why some people think that is much better not to reaffirm a debt that will be discharged in your bankruptcy.
But there is also a good thing about executing this reaffirmation agreement. That is the future payments that you will be going to make will be positively reported on to the agencies concerned thus helping you to reconstruct your credit.
Reaffirmation does not generally apply to unsecured debts. Unsecured debts may include the following:
-Debts for alimony and child support,
-Loans made or guaranteed by a governmental unit,
-Debts for wilful and malicious injury by the debtor to another entity,
-Debts for death or personal injury caused by the debtor’s and
-Debts for certain criminal restitution orders.
For many people, reaffirmation of debt is a process that is very complicated. That is why; you need to seek the assistance of a bankruptcy attorney which specializes on bankruptcy laws. A Spokane Bankruptcy attorney can provide free consultations regarding your bankruptcy queries or you may be having second thoughts with this matter.