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What is a Bankruptcy Reaffirmation Agreement?

Last updated 2 years ago

For many people, filing for bankruptcy is a terrifying process. The “all or nothing” quality of discharging one’s debts through Chapter 7 bankruptcy can be very intimidating—especially when it means having your assets liquidated. Still, reaffirmation agreements can grant you a little more control over which assets are liquidated and which ones you keep. Here’s a quick look at reaffirmation agreements and how they can help with the bankruptcy process: 

Debt Repayment

When you file for Chapter 7 bankruptcy, you agree to have many of your assets liquidated in order to pay off your outstanding debts. A bankruptcy reaffirmation agreement, however, allows you to reinstate your obligation to pay off a particular debt by normal means. In essence, a reaffirmation agreement allows you to “take back” the terms of your bankruptcy as it applies to whichever debt you are reaffirming.

Court Approval

It should be noted that reaffirmation agreements are completely voluntary. Before you decide to enter into a reaffirmation agreement, you should have your bankruptcy lawyer help you determine whether it’s necessary. Even if you wish to go forward with a reaffirmation, it first has to be approved by a judge. If the judge determines that the reaffirmation is against your best interests, he will not approve it.

Property Retention

Why would someone wish to pay a debt that would otherwise by discharged? Most people opt for reaffirmation in order to keep a piece of property—a vehicle, for example. By signing a reaffirmation agreement, an individual agrees to resume his obligation to repay the auto loan, rather than forfeit the vehicle.

Though a reaffirmation agreement sounds straightforward, it can actually be risky. For help determining whether or not a reaffirmation agreement is worth the risk, you should contact Golden State Law Group in San Diego. Our team of bankruptcy lawyers is standing by to help you get through your bankruptcy situation. Call us today at (619) 234-3333 to get started. 

 

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