What is a Reaffirmation Agreement?

A reaffirmation agreement (agreement to pay back), in bankruptcy terms, is an agreement between the debtor and creditor that waives the discharge of the debt that would have otherwise been discharged in the bankruptcy. 11 USC Section 524 is the bankruptcy code section where reaffirmation is found. Reaffirmation agreements are voluntary. Typically, a reaffirmation agreement comes into play when a bankruptcy filer has a car and associated auto loan on that car, and the bankruptcy filer wants to keep the car. If the debtor does not sign a reaffirmation agreement, the creditor that holds the car loan has the right to repossess the vehicle-even if the debtor is current on his or her payments. As a result, most debtors choose to reaffirm their car loans and keep their cars. The creditor and debtor must both sign the reaffirmation agreement, and usually must be approved by the bankruptcy judge overseeing your case.

If you later fail to pay a reaffirmed debt, you will still owe it as if you never filed bankruptcy. The creditor can collect on the debt through any legal means. For this reason, reaffirmation agreements should be taken seriously. If you fail to pay later, then you will be liable for the debt and one of the reasons for your filing bankruptcy (fresh start from all possible debt) would have failed. You do have the right to rescind or cancel the reaffirmation agreement any time before the discharge is entered or within 60 days of filing the agreement, whichever is later.

How Bakersfield and Temecula Bankruptcy Lawyer Scott Bell can help

If you have found yourself in unmanageable debt, but are still hesitant to file for bankruptcy, come discuss it with us with a free consultation. You can reach us at (661) 243-1737 or (951) 296-6775. You can also speak with us directly through the Live Chat feature of our website.

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