What is a reaffirmation agreement, and how does it work?

Posted on April 16, 2009. Filed under: Uncategorized |

A reaffirmation agreement is an agreement by a debtor and creditor in Chapter 7 bankruptcy about how to treat a particular debt that would otherwise be discharged in the debtors bankruptcy.   Usually, the debt is secured by collateral that the creditor could repossess or foreclose on.  In the reaffirmation agreement, the debtor agrees to pay some or all of the debt, usually, according to schedule.  In exchange, the creditor agrees not to repossess or foreclose on collateral that secures the debt, as long as the debtor makes the agreed upon payments.  A valid reaffirmation agreement puts the debtor under a legal obligation to pay back the entire amount agreed upon, even if this is more than the value of the collateral that the debtor is keeping .  So if the debtor defaults in the payments required under the reaffirmation agreement, the creditor can repossess or foreclose, and then seek a personal judgement against the debtor if the sale of the collateral does not satisfy the debt.

For additional information on this and other topics related to bankruptcy or your financial situation, please contact the Office of John Rogers, Attorney at Law at johnrogers@glasgow-ky.com   or toll free at 1-888-651-9353.  We will be happy to discuss your situation with you and schedule you a free, no obligation appointment to meet with us.

John Rogers, Attorney at Law is Board Certified – Consumer Bankruptcy Law – American Board of Certification , and is a member of the National Association of Consumer Bankruptcy Attorneys.

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