To reaffirm or not to reaffirm--that is the question

[anonymuse]

I'm lost with the whole reaffirmation deal.

What exactly does it mean?

What kind of debts do you consider reaffirming (home, auto, home equity loan, secured creditor)?

Does the chapter you are in make a difference?

What other factors come into play?

[CATCHMEIFYOUCAN]

It's not worth re-affirming a creditor THATS FOR SURE, whats the point of declaring BK if your going to do THAT, unless it is your car or house? It defeats the whole purpose of filing BK. Just my opinion.

re-affirming
Here's how it works: Sometimes you file Chapter 7 and not all your debt is wiped clean. With some of your debt you can keep the item you bought (car, computer, home furniture, etc.) and agree to continue making payments after your bankruptcy. It's called "reaffirming," and what it means is that you make a promise to pay back what you owe AFTER your bankruptcy is discharged.

Chapter 7: Chapter 7 is designed for individuals and results in or provides a discharge for most unsecured debts. A discharge is the court order which states you do not have to repay those debts and operates as a shield which prohibits the creditors from making any and all efforts to collect on those debts.

Chapter 13: This type plan offers to re-pay debts from the debtors future income while retaining their assets.

Catchmeifyoucan

[saucey]

my lawyer told me that under the new law you have to reaffirm secured debts.

[HHM]

Reaffirmation only applies to Chapter 7. Chapter 13 is a repayment plan, so reaffirmation doesn't apply.

Under the old or new law for Chapter 7, a secured creditor has the right to adequate protection, meaning, they have the right to get paid back. I don't know off the top of my head if, under the new law, you are "required" to reaffirm secured debts, but if you want to keep the underlying property, you have to keep making payments, and if you are behind on payments on a secured debt (i.e. a car loan), you will have to have a fast way of coming current if you expect to keep the car.

The only time you reaffirm with unsecured creditors is to avoid a fraud case, if you ran up your credit cards in October, and filed Bankruptcy in November, you will be required to pay back those debts, either from the creditor winning a fraud action against you or you voluntarily reaffirming the debt to avoid the fraud action.

In any event, discuss the issue more in depth with your lawyer if you have questions...but the general rule is, if you want to keep the item (i.e. car, furniture etc), you will have to continue making payments until the debt is satisfied.

[ConnieS]

In my case (Chapter 7 no asset) the bank that holds the title on my car will basically NOT accept any payments unless I reaffirm with them. They closed my account and will not set up a new payment plan (I only owe 5 payments) until they recieve the reaffirment contract approved by the courts. The bank that holds our mortgage and HE has continued to debit our payments on time and we have not heard anything from them to date. The lawyer is contacting them to see what their policy is on reaffirming. I guess it's different for every case and person.

[CATCHMEIFYOUCAN]

Every State and Case are Different

I guess it's different for every case and person.

Im filing in the state of VA. I didn't have to reaffirm my car loan with the dealer, they just sent me a postcard of the sort telling me to make sure I pay by the due date and send payment to their "bankruptcy," dept address. Yeah, every state and case are different. I've heard their are some states/loans that make you sign an re-affirmation agreement, without they can take their stuff back.

Best wishes, Catchmeifyoucan

[tradewiz50]

I guess it's different for every case and person.

It's different based off the agreement you signed when you financed your home or vehicle.

[anonymuse]

My only secured debts are mortgage (current), HELOC (current), and lien (not up-to-date) for HOA payments. My lawyer gives me the "don't worry--you don't need to" line, but when I ask why he just says "don't worry--you don't need to." Just trying to figure out the why's behind it to understand it beyond my case.

Thanks for everyone's help. I got out the NOLO book and posted the section here in case anyone was lost like me.

This is what I gathered from the NOLO Ch 7 book:

Reaffirm a Debt

DescriptionAdvantages. Reaffirmation can be used when lien
avoidance and/or redemption are unavailable or
impractical. It provides a sure way to keep property,
as long as you abide by the terms of the Reaffirmation
Agreement.

DisadvantagesRestrictionsWhen to use itHow it works

[SinkingFast]

Does your attny have copies of your Mortgage Instruments, Anon. Could be he's looked thru them and found what he needed to know that you're not in jeopardy if you don't reaffirm.

May be some magical, mystical, legaleeze phrasing that would require a Filer to reaffirm is not in your Mortgages.

[anonymuse]

He doesn't have the mortgage legalese, but I'm going to get out those papers and bring them to my meeting Monday. Thanks!

[Credit Hater]

Will you please tell me the name of this NOLO book? I could benefit greatly from it.

I need that along with IRS help books. But we'll stick to this NOLO book ( I don't want to hijack your thread )

[anonymuse]

Will you please tell me the name of this NOLO book? I could benefit greatly from it.

I need that along with IRS help books. But we'll stick to this NOLO book ( I don't want to hijack your thread )

http://www.bkforum.com/showthread.php?t=7922