You may be ineligible for a Chapter 13 bankruptcy filing, in which you are allowed to pay off your outstanding debts in a three- to five-year repayment plan all while keeping your assets. However, you may hesitate to pursue Chapter 7 bankruptcy because you do not want a bankruptcy trustee to liquidate your assets and use their funds to pay back your remaining creditors. Well, you may be more on board for a Chapter 7 bankruptcy filing if you take advantage of the reaffirmation agreement option. With that being said, please read on to discover why you should sign a reaffirmation agreement and how a seasoned Louisville, Kentucky Chapter 7 bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you uphold its terms and conditions.
Why should I sign a reaffirmation agreement during my Chapter 7 bankruptcy case?
Essentially, a reaffirmation agreement is a voluntary legal agreement between you and your creditor where you promise to pay all or parts of a debt that would otherwise be discharged in your Chapter 7 bankruptcy case. Now, you would want to remain responsible for this debt obligation so that your creditor, in turn, promises not to repossess the tangible asset that is tied to this secured debt and used as collateral. Without further ado, entering this agreement may be of interest to you for any of the following reasons:
- You may continue to stay in your family home rather than having to uproot your family members during this difficult time.
- You may continue to use your automobile to commute to and from work, helping you earn the wages you need to pay off your outstanding debts.
- You may continue to maintain possessions of jewelry or other sentimental family heirlooms you wish to pass down to your loved ones eventually.
What happens if I go against the terms and conditions of my reaffirmation agreement?
A reaffirmation agreement may be very beneficial for you and your family members, but only if executed properly. This is to say that you must not sign this legally binding agreement unless you are certain that you can afford to keep up with your renegotiated debt payments.
If you default on your reaffirmed debt, your creditor may take the tangible asset used as collateral (i.e., family home, automobile, jewelry, etc). Even after having this asset repossessed and liquidated, you may still be financially obligated to pay off its remaining balance. This is because, by signing a reaffirmation agreement, you essentially waived your rights to the protection of a Chapter 7 bankruptcy discharge for this specific debt.
In conclusion, if you still have doubts about how to proceed, please consult a competent Louisville, Kentucky Chapter 7 bankruptcy lawyer. Our team at Schwartz Bankruptcy Law Center will point you in the right direction.