Quick Answer: What Happens When You Reaffirm A Debt?

What does it mean to reaffirm a debt?

Reaffirmation is a type of agreement a debtor makes with a lender to repay some or all of a debt despite going through bankruptcy proceedings..

Can I sell my home if I didn’t reaffirm?

Yes, you can sell the home. The effect of no reaffirmation is that you do not have a personal obligation to pay the mortgage. You still are the titled owner and the mortgage is still a lien on the property so it must be paid in order to sell the property.

What happens if I did not reaffirm my mortgage?

If you do not reaffirm the mortgage, your personal liability for paying the debt represented by the promissory note is discharged in your bankruptcy case. … The company can foreclose the mortgage and force a foreclosure sale if you stop making payments.

How does reaffirmation work?

Reaffirmation is the process wherein you agree to remain responsible for a debt so that you can keep the property securing the debt (collateral). You and the lender enter into a new contract—usually on the same terms—and submit it to the bankruptcy court.

Who files the reaffirmation agreement?

An executed reaffirmation agree- ment may be filed by any party, including the debtor or a creditor. It must be filed within 60 days after the first date set for the first meeting of creditors in the bankruptcy case unless the deadline is extended by the bankruptcy court.

What does reaffirmation of debt mean on credit report?

Once an account is reaffirmed and paid in full, it should no longer show a status of “included in bankruptcy” on your credit report. When you reaffirm a debt, it means you enter into an agreement with your lender to continue to making payments on the account rather than including it in your bankruptcy.

What happens when you reaffirm a car loan?

When you reaffirm a car loan in bankruptcy, you sign an agreement with the lender that you will continue to pay for the car as if you had not filed bankruptcy in exchange for keeping it. To reaffirm a car loan, you must be able to show the court that the vehicle is necessary and that the payment is reasonable.

What happens if I do not sign a reaffirmation agreement?

The main downside of not signing a reaffirmation agreement is that the lender will often deny you access to online account records. The lender will usually continue to accept the monthly payments, just make sure to put the loan number in the memo field of your check or money order.

Can I refinance if I did not reaffirm my mortgage?

If you didn’t reaffirm your debt, you might still be able to refinance later, as long as you still legally own the home. However, if you didn’t reaffirm the debt, you can’t refinance the loan with the same lender because of bankruptcy laws. So you’ll have to find a new lender to refinance the loan.

How do I reaffirm my mortgage?

For a reaffirmation to be valid, a “reaffirmation agreement” must be signed by you and filed at the bankruptcy court. It must also be approved and signed by your bankruptcy attorney OR must be approved by a bankruptcy judge at a “reaffirmation hearing” that you must attend.

What debts Cannot be discharged in Chapter 7?

Debts Never Discharged in BankruptcyAlimony and child support.Certain unpaid taxes, such as tax liens. … Debts for willful and malicious injury to another person or property. … Debts for death or personal injury caused by the debtor’s operation of a motor vehicle while intoxicated from alcohol or other substances.More items…

Can you reaffirm a debt after discharge?

Secured creditors may retain some rights to seize property securing an underlying debt even after a discharge is granted. … If the debtor decides to reaffirm a debt, he or she must do so before the discharge is entered. The debtor must sign a written reaffirmation agreement and file it with the court.

Does reaffirming help credit?

Reaffirming Helps Rebuild Your Credit Since a bankruptcy wipes out the car loan but not the lender’s security interest in the car, your car lender won’t report your post-bankruptcy payments to any credit reporting agencies. … If you reaffirm the loan, your lender will continue reporting payments.

Can you cancel a reaffirmation agreement?

Yes. You can cancel (or “rescind”) your reaffirmation agreement, even if a judge has already approved it. NOTE: WE STRONGLY RECOMMEND THAT YOU SPEAK WITH AN ATTORNEY TO ADVISE YOU ABOUT THE CONSEQUENCES OF CANCELLING A REAFFIRMATION AGREEMENT IN YOUR CASE.

What is the purpose of a reaffirmation agreement?

A reaffirmation agreement in United States bankruptcy law refers to an agreement made between a creditor and the debtor that waives discharge of a debt that would otherwise be discharged in the pending bankruptcy proceeding.