For many, making the decision to file for bankruptcy is not something that is made lightly. One aspect of this process many have concerns regarding is whether or not they can keep their assets, like their car or home, during this process. If you are worried about this process, you may be interested in creating a reaffirmation agreement. Not sure what this is or what it entails? The following blog explores what you should know about these complex matters and why connecting with a Memphis, TN consumer bankruptcy lawyer is in your best interest during these difficult times.
What Is a Reaffirmation Agreement?
During bankruptcy, depending on the type you file, you’ll find that certain assets may be at risk. In many instances, you’ll find that during Chapter 7, which is a liquidation process, your assets can be taken and sold to repay creditors. This is also the case for secured debts, like car loans. If you are behind on your car payment and include it as part of your bankruptcy estate, the bank will likely repossess the car since you can no longer make payments.
However, you’ll find that if you sign a reaffirmation agreement, you’ll be allowed to hold on to the asset that would otherwise be taken because this agreement allows you to retain the asset in exchange for paying the outstanding debt.
The actual agreement contains important information regarding the outstanding debt, like the amount remaining, the terms of your repayment plan, and details about the collateral, which is something like a car or home.
You should also note that if this is something you would like to pursue, you must request this within 60 days of the meeting of creditors, and the creditor you are requesting this agreement from must approve it.
Should I Sign One in Memphis?
Whether or not a reaffirmation contract is something you should consider signing depends on your unique circumstances. Typically, if you know you’ll be able to meet the repayment terms established in the contract in addition to all your other financial obligations, you may want to sign. However, if you know you cannot fulfill the terms of the agreement, it’s not in your best interest to do so.
You should also note, that if you sign a reaffirmation agreement for a car, for example, but the car is totaled, you will still be responsible for making payments per your contract.
If you are worried about your assets and have considered this option, the best thing you can do is connect with an experienced attorney from the Arnold Law Firm to discuss your circumstances in further detail. Our team will examine the circumstances of your case to determine the best possible outcome to assist you in these matters. Connect with us today to learn how we can assist you during this process.
