Reaffirmation of Secured Debt in Bankruptcy | Kentuckiana Lawyer

Helping People Retain Property
When you file for bankruptcy, there are exemptions which allow you to keep a good deal of property.  However, property which is associated with secured debt oftentimes requires a reaffirmation agreement.  When you file bankruptcy, the contract between you and your secured creditor is broken.  Debt reaffirmation is essentially a new contract between you and your secured creditor.  You can ask the bankruptcy court to remove certain property from the bankruptcy estate by indicating through a reaffirmation agreement that you will pay the debt rather than having the property repossessed and sold.  For example, many people ask to reaffirm their car loans because they want or need to keep their vehicle.

What is a Reaffirmation Agreement?
Even when you can discharge a debt, you may have special reasons for why you want to promise to pay it.  For example, you may want to work out a plan with the bank to keep your car.  To promise to pay that debt, you must sign and file a reaffirmation agreement with the court.  Reaffirmation agreements are governed by special rules and are entered into voluntarily.  Reaffirmation agreements are not required by bankruptcy law or by any other law and they must be:

  • Voluntary
  • Must not place too heavy a burden on you or your family
  • Must be in your best financial interest

How Does it Work?
Normally, debt is reaffirmed under the same terms as existed in the original contract.  Before allowing the reaffirmation, the court will analyze your income, expenses, and the value of the item.  If the reaffirmation is allowed, you have 60 days to change your mind.  After that, the contract becomes permanent and you must pay accordingly.

Items that are often considered for debt reaffirmation include:

  • Automobiles
  • Furniture
  • Appliances
  • Recreational vehicles like boats or motorcycles
  • Jewelry

When you consult with Daniels Associates, we will give you an honest assessment of your situation and advise you on whether it would be wise for you to reaffirm debts.  We want you to understand the potential outcomes of every choice you make during the bankruptcy process because we want to see your financial situation improve.

Contact a Kentuckiana Reaffirmation Agreement Lawyer
To learn more about reaffirmation of secured debt in bankruptcy, schedule your free initial consultation by calling 502.583.8300 or by contacting Daniels Associates online.