Reaffirmation agreement refers to a contract between the debtor and a creditor under which the debtor agrees to pay a debt that would otherwise be discharged. By agreeing to the contract, the debtor is waiving his right to discharge the debts in exchange for the creditor’s promise not to repossess the property as the underlying loan is being reaffirmed.
There are points that you should consider if you are planning to sign up this agreement.
–The agreement is valid only to the extent that it is enforceable in non-bankruptcy law. Also, statutory or common law policing doctrines such as unconscionability, fraud, and duress may make the agreement avoidable under non-bankruptcy law. Furthermore, the agreement must have been made before the discharge is filed in court.
–The debtor may rescind the agreement at any time before the discharge is granted, or within 60 days of the agreement having been filed with the court, whichever is later. In addition, the creditor must provide the debtor with a disclosure statement containing the information set out at or before the time of signing the agreement. This agreement must specify the amount to be affirmed, the amount of fees or costs, and the annual percentage rate.
–It is vital to have an agreement and a common understanding between the debtor and a creditor.
Legal counsel is necessary help you with this agreement smoothly and both parties are convinced and assured that things work out just fine. Similarly, the agreement must also be realized before the debtor is given a lot of disclosures required from his creditor. Your attorney must check the documents to insure the agreement is proper and enforceable.
Since the reaffirmation agreement serves as the binding legal document and common understanding between the debtor and the creditor, it must be approved and examined first by the court. You can only withdraw and formally retract the agreement within 60 days after signing.
Moreover, pertaining to this, the debtor’s attorney should be certain that the debtor can maintain such a reaffirmation (can actually pay for the reaffirmation). Also, they have to make sure that there is no undue hardship. In the event that the attorney is unwilling to sign or suggest for the debtor to sign the agreement, then the judge will evaluate the situation.
Generally, reaffirmation does not usually apply to unsecured debt. In this event, the debtor must negotiate with his creditor. It is usually applied for secured property like a car and a home.
On the whole, reaffirmation agreement is one vital legal bond between the debtor and a creditor with the guidance and supervision of both parties’ legal counsel and the bankruptcy judge.
Some of these agreements are the creditor’s promise that he/se will not repossess or take back the debtor’s properties and a creditor’s not pursuing a co-debtors as long as the payments are done and other debt responsibilities are met.
If you have questions about bankruptcy, contact a Spokane Attorney for a consultation.