Benefits Of Reaffirmation Agreements in Bankruptcy

The benefits of reaffirmation agreements in bankruptcy almost always outweigh any cons. The idea of going through bankruptcy, for many people, leads them to believe that they will have to give up all their assets. They may wonder about the assets that have great value in their lives, like the vehicle they use to get to work or the home that gives them a place to live. Many times, without their vehicles, people would not have a reasonable way to get to work. This is where a reaffirmation agreement can come into place. When you are thinking about going through bankruptcy, a reaffirmation agreement may make the process easier and less stressful.

What Is A Reaffirmation Agreement?

A reaffirmation agreement is a contract between a creditor and a debtor. During Chapter 7 bankruptcy, this type of agreement allows the debtor to keep the debt for specific items and remain paying on it to keep the items. For example, if the debtor wishes to keep their car, the company which holds the vehicle loan signs a reaffirmation agreement so they will be able to keep it. But in this case, they must also still be able to make the payments on the car. This is beneficial to all parties usually, but the caveat is that you must be up to date on your payments prior to the agreement. Without being up to date on payments, the creditor cannot guarantee that you will pay them timely.

Generally, a reaffirmation agreement will allow the debtor to have better credit after the bankruptcy. Instead of having all qualifying debts discharged, they can hang onto a few debts that are useful to them, thus helping to rebuild their credit score instead of starting from zero. A reaffirmation agreement also helps the creditor collect on the debt.

Maintain Possession Of Collateral

As stated above, one of the most important benefits of signing a reaffirmation agreement is that it allows the debtor to maintain possession of the collateral. In cases of mortgage debt, this can provide some certainty for the debtor and their family throughout the process.

It is essential to fully understand the terms of a reaffirmation agreement before you sign one because you are still responsible for the debt under the agreement. However, once the agreement is signed, you have up to 60 days to revoke the agreement, although there may be consequences.

Requirements Of A Reaffirmation Agreement

For a reaffirmation agreements In bankruptcy to be valid, there are certain elements that it must meet. The first element is that the court must receive the agreement before the debtor has received a discharge of the debt. This means the debtor must act quickly to enter a reaffirmation agreement with a creditor early in the bankruptcy process. Most of the time the reaffirmation process will start not long after filing, and right before your hearing date.

The second element is that both parties must voluntarily agree. A creditor cannot force a debtor to sign a reaffirmation agreement so that they can get paid back on the debt. Finally, the debtor must be able to revoke the agreement within 60 days. If all of these elements are met along with the agreement being in writing, filed with the court, and certified by the debtor’s attorney, it will likely be valid and upheld.

Oklahoma Bankruptcy Attorneys

In Oklahoma, Reaffirmation Agreements In Bankruptcy are not there to be that difficult. Contacting the Kania Law Office attorneys can help determine if a reaffirmation agreement suits your circumstances. We will walk you through the process and ensure you fully understand the agreement and the consequences of signing it. Call our offices at 918-743-2233 or visit us online to schedule your consultation.