Should I Reaffirm My Debts After Bankruptcy?

November 1

When it comes to debt reaffirmation in a bankruptcy case, bankruptcy attorneys in Carlsbad advise caution, emphasizing the need for a proper legal advice. Debt reaffirmation has its pros and cons, which should be weighted depending on the situation, but always objectively and with utmost care. Contact a trusted, affordable bankruptcy attorney, to make sure that your debt plans are manageable and safe to execute.

Chapter 7 bankruptcy in a nutshell

Chapter 7 bankruptcy plan is the most common bankruptcy form in the US, and the simplest one to execute. For the debtor, however, this type of bankruptcy means loss of some assets, although they can choose between debt reaffirmation and redemption in bankruptcy if they wont to keep certain assets. The bankruptcy trustee is allowed to collect and sell all of the debtor’s non-exempt property, in order to claim the funds to pay off the debtor’s creditors. The mentioned division of assets to exempt and non-exempt property is out of the debtor’s hands.

Bankruptcy case debt reaffirmation

After the division, as stated, any non-exempt property will be taken away and sold to settle the debts. Sometimes, to keep certain assets (like a car or a house), a debtor can make a debt reaffirmation agreement with a creditor  to whom he owes that asset. In that case, bankruptcy plan discharge wouldn’t refer to that specific asset. The debtor commits to paying the rest of the related debt to the creditor, to be able to stay in the possession of the desired asset.

When to consider debt reaffirmation

There are a few cases when debt reaffirmation can be good for the debtor.

  1. Repaying becomes easier.  If there is an asset you really need to keep after liquidation, debt reaffirmation can make that happen. As bankruptcy discharge will grant you relief from all other debts, it will leave you in a position to possibly be able to pay off the asset you want to keep.
  2. Negotiating more favorable loan terms. Debt reaffirmation is a process in which you get to sign a completely new contract. This means that the possibilities for negotiating some more favorable terms open up, and your creditor might also be open to some deal modifications.
  3. Rebuilding your credit faster. After reaffirmation, you have to keep paying for your debt in previously agreed monthly installments, and your creditor is obliged to report those payments to the credit reporting agencies. This enables you to make a good start in rebuilding your credit sooner.

    When not to consider debt reaffirmation

Signing a debt reaffirmation agreement is an act you shouldn’t do without consulting an expert so you may start looking for a dependable and affordable bankruptcy attorney in your area. If you don’t have a reliable, practicable repayment plan, the situation can easily get out of hand. If you don’t manage to make the agreed payments in time, your creditor can still repossess the asset your debt was reaffirmed for, and sue you for the remaining, unpaid amount of debt.

Don’t decide in haste – Contact #1 competent, affordable bankruptcy attorney in Carlsbad

Debt reaffirmation isn’t a light matter, as several aspects need to be considered and discussed. With the help of experienced bankruptcy attorneys Chang & Diamond, APC, you can be sure the decision you made is the best one for your specific case. Your search for a competent, affordable bankruptcy attorney in Carlsbad is finally over. Contact us today, or visit our San Diego office at 9089 Clairemont Mesa Blvd, #110.