The Reaffirmation Agreement with Regard to Filing Chapter 7 Bankruptcy
A San Francisco Bankruptcy Attorney talks about the Reaffirmation Agreement...
Most of the time, in a Chapter 7 bankruptcy, according to most San Francisco Bankruptcy Attorneys, if the debtor has a vehicle that is current on its payments, the debtor will be able to keep that vehicle. The debtor, however, needs to make a declaration or contract to the court stating that they can continue to make the payments on the vehicle despite filing for bankruptcy and being unable to pay the rest of his debts. In other words, it creates an obligation to repay that debt after the bankruptcy case is completed. This declaration is called a reaffirmation agreement.
Typically, only secured debts (usually homes) are reaffirmed in order to allow the debtor to retain the collateral. Under the amendments to the Bankruptcy Code, which took effect in 2005, secured creditors can treat the filing of the bankruptcy as a default and use that as a basis to repossess their collateral, like a car, after the bankruptcy case is over, if applicable state law allows it. As a result, the only sure way to keep a secured motor vehicle or other personal property is to enter into a reaffirmation agreement. As long as the debtor can continue to make the payments on the vehicle, the debtor will be able to keep the vehicle even though they are filing bankruptcy. This debt will continue and will not be discharged in the bankruptcy.
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