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Reaffirmation Agreements: Gateway to Rebuilding

In a Chapter 7 bankruptcy case, you may wish to keep your home or your car, or both. Most often, you can do this. If you choose to keep making your mortgage payments and/or car payments, you may consider reaffirming your debt.

A Reaffirmation Agreement is an agreement in which you re-obligate yourself legally to pay that debt. By signing the agreement, you are essentially telling the creditor that you want your debt with them to continue on just as if a bankruptcy never happened.

In exchange for signing the agreement, you will continue receiving credit reporting from them, and you will keep the collateral (car or house). If you do not make the payments, they can take your collateral (car or house) AND they can sue you for the debt.

If you do not sign the agreement, you will not receive any credit reporting. In many cases, you may still keep the collateral as long as you continue to make regular monthly payments. If you did not make the payments, the creditor could take the collateral, but they could not sue your for the balance owed on the debt.

Reaffirmation agreements are completely voluntary. You are not required to sign one. Some lenders, however, are not willing to permit you to keep the collateral, however, unless you do sign one. Additionally, if you do not sign the reaffirmation agreement with regard to your mortgage, for example, it may limit your future ability to modify your home loan.

If you are interested in learning about your options through bankruptcy, make an appointment to speak with one of the experienced Kentucky bankruptcy attorneys at O’Bryan Law Offices today. We now offer free “Life After Bankruptcy” courses to our clients to help them rebuild their credit score. Call us today at 502-339-0222 for a free bankruptcy consultation. Get a Fresh Start today!


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