Reaffirmation Agreement

The purpose of bankruptcy is to discharge or clear away your debts so you can get a fresh start financially. Still, you may have some debts you wish to keep, such as a car loan or mortgage. If you have fallen behind on secured loan payments like your home loan and you want to keep the property after you file a Chapter 7 bankruptcy, a reaffirmation agreement gives you the chance to do so. This agreement reaffirms the debt you owe, allowing you to keep your home, car, or personal property that has been purchased recently as long as you can make the payments.

While this may seem straightforward, the truth is reaffirmation agreements can be very complex so it is best to work with a Las Vegas reaffirmation agreement attorney if you plan to reaffirm debt during your bankruptcy.

What is a Reaffirmation Agreement?

With secured loans like mortgages, you pledge property as collateral to get the loan. If the loan is not repaid, the lender can repossess or foreclose the property. When you file Chapter 7 bankruptcy in Las Vegas, you have the option of choosing to repay secured loans to keep your property. You will need to sign a reaffirmation agreement to do so. This agreement is a new contract between you and your lender in which you agree to repay the loan under the original terms. If this reaffirmation agreement is not signed, the lender can usually repossess the property.

If you want to sign a reaffirmation agreement, your attorney will also need to sign the agreement and attest that he or she has discussed the contract and consequences with you. If you do not have an attorney, you will need to go to a reaffirmation hearing before the court.

Reaffirmation Hearings

You can enter into this reaffirmation agreement with a lender as long as the agreement is voluntary, your case is not discharged, your attorney has counseled you on the consequences of the agreement, and it will not impose an undue hardship on you. If you meet all of these criteria, court approval is not necessary.

The court will schedule a reaffirmation hearing if all of these conditions are not met in your case. This is usually the case when the debtor is not represented by a bankruptcy attorney or there is a presumption that the agreement would be an undue hardship.

If there is a hearing, you will need to provide proof that the debt agreement will not pose an undue hardship and you will be able to afford the loan payment and necessary expenses. You will also testify that you understand the consequences of the agreement.

Contact a Las Vegas Reaffirmation Agreement Lawyer

If you are planning to keep the property secured by a loan after bankruptcy, it’s important to consider all of your options. A reaffirmation agreement may or may not be in your best interest. An experienced bankruptcy attorney can help you understand the financial consequences of reaffirming a debt in the bankruptcy and help you prepare a reaffirmation agreement with a lender.

Contact Aaron Law Group today for a free consultation with a bankruptcy attorney to learn more about qualifying for bankruptcy and whether a reaffirmation agreement is right in your situation.