4 questions about Bankruptcy Reaffirmation Agreements

When a client files for Chapter 7 bankruptcy they are given the opportunity to reaffirm certain secured debts like cars and houses.

What does "Reaffirm Mean?"

Reaffirming a debt means that you are agreeing to be "on the hook" for a debt. You are saying the lender that you want to keep the item your purchased and you are agreeing to repay the debt. The advantage to reaffirming a debt is that you will be able to rebuild your credit quicker. The lender will report your on time payments to the credit agencies which will build your credit score. However, if you do not make your payments on time then you will receive negative marks on your credit report.

How long do I have to file a Reaffirmation Agreement?

A person who filed Chapter 7 bankruptcy has 60 days from their 341 Hearing date to file a Reaffirmation Agreement.  It is possible to get additional time but your attorney will have to ask the Court for an extension. Many attorneys will charge an extra fee for this. My office will file one extension at no cost but there will be a charge for any additional extension requests.

What if I change my mind about Reaffirming a Debt?

You can rescind your reaffirmation agreement after it has been entered. This is still subject to the 60 day period after your hearing. If it has been more than 60 days since your 341 hearing the Court can grant a request to rescind the Agreement but this has to be done by special request to the Court. 

Will my attorney get the reaffirmation agreement for me?

When you file a bankruptcy your attorney will submit a Statement of Intent as part of your bankruptcy petition. This Statement of Intent will tell the creditors what you would like to do with their secured debt. In most cases the Creditor will send the reaffirmation agreement to your attorney. The attorney will complete the parts of the agreement having to do with your income. Your attorney will want to meet with you to review the Reaffirmation agreement so that you understand the terms. If everyone is in agreement then you will sign the reaffirmation agreement and your attorney will return it to the Creditor. The Creditor will then file it with the Court .  Some lenders and loan servicers can be very difficult to work with. Particularly Wells Fargo and Ocwen have polices in place that make it difficult to get the document. If you lender does not send the reaffirmation agreement it is your responsibility to contact the lender and request the reaffirmation agreement be sent.