You may know that your consumer bankruptcy case legally releases certain debts from your immediate financial responsibility, in what is known as a bankruptcy discharge. However, even though this is lawful and entirely part of the process, you may still feel a sense of guilt in doing so. That is, you may usually be a person of your word and regret falling short of your end of the agreement with certain creditors. With this, you may want to attempt to pay them back anyway, by incorporating a reaffirmation agreement into your bankruptcy plans. Well then, please follow along to find out the purpose of a reaffirmation agreement and how a proficient Rockland County Chapter 7 bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help you decide whether signing one is in your best interest.
What is a reaffirmation agreement in a bankruptcy case?
Typically used during Chapter 7 bankruptcy proceedings, a reaffirmation agreement is a legally binding contract between you (i.e., the debtor) and your creditor, with which you voluntarily commit to repaying a debt that would otherwise be discharged after your case. The most common reason why debtors sign up to do this is so that they may keep the collateral securing a certain loan. For example, you may want to initiate a reaffirmation agreement for both your mortgage and car loan so that you may guarantee that your home and automobile stay within your possession.
When is signing a reaffirmation agreement a good decision?
When providing your signature at the bottom of a reaffirmation agreement, you promise to continue making debt payments to a certain creditor under original or modified terms. In other words, you are signing up for an ongoing financial obligation. For this reason, the New York State Bankruptcy Court must approve this reaffirmation agreement before it can go into effect. Further, your representing attorney may have to vouch for you and confirm that this financial commitment should not and will not cause you any undue hardship.
That said, we will look deeply at your extenuating financial circumstances to help you decide whether a reaffirmation agreement is in your best interest. This is because, should you ever default on an original or modified debt payment, your creditor may exercise their right to initiate legal action against you. Here, they may sue you for the remaining balance of your loan, or even take steps toward repossessing the collateral securing it.
In the end, with a reaffirmation agreement, you essentially up a piece of your opportunity for financial relief that you would have otherwise been allotted with your bankruptcy case. And if you ultimately fail to uphold your end of the agreement, you may do nothing but worsen your already poor financial standing. This is why we will help you think long and hard about this big decision.
If you require legal representation, look no further than a talented Rockland County bankruptcy attorney. The client testimonials on our website speak for themselves, saying that you will not regret hiring the team at The Law Offices of Allen A. Kolber, Esq., P.C.
