Filing for bankruptcy can be a confusing process. There are several steps involved. One of these steps includes deciding whether to file for debt reaffirmation. Finding out what debt reaffirmation is, how debt reaffirmation works, and what steps are involved may help you decide whether this decision is right for your financial situation. You can also talk to a Tullahoma bankruptcy lawyer if you have questions about this.
What is Debt Reaffirmation?
When debt reaffirmation is filed, this means you will be required to pay the original debt to retain the property. What this means is you will not be able to discharge this specific debt in bankruptcy. Other debts will likely be discharged but not this debt.
People may choose to use reaffirmation to keep property that they find useful, valuable, or necessary for restarting after bankruptcy. Certain types of property do not usually require reaffirmation agreements to keep them because they are exempt from creditors. Some examples include jewelry, household goods, and furniture.
Houses and vehicles can be repossessed and taken by creditors when debt is not paid. These are the properties many people aim to keep by signing a debt reaffirmation agreement during the bankruptcy process. Transportation for work is crucial to rebuilding finances after bankruptcy, and a house is necessary for having a place to live.
In other words, one of the main reasons for reaffirmation agreements is to prevent property from being taken when filing for bankruptcy. Creditors have security interests with debtors for certain things like a home or car. When a debtor cannot make a payment, the security interest allows the creditor to take away the property.
Submitting a debt reaffirmation agreement can also prevent problems for those who have co-signed on debt. Deciding whether to reaffirm debt comes down to figuring out whether you need to retain the property after bankruptcy, whether due to need or co-signed debt.
How Debt Reaffirmation Works
The debt reaffirmation process is completely optional and not required when filing for bankruptcy. It is up to you in terms of whether you want to fill out a debt reaffirmation form. You will need to fill out a Reaffirmation Agreement form, disclosure forms, and other bankruptcy documents.
This reaffirmation agreement must meet the criteria of bankruptcy provisions. Be prepared to provide the amount of debt you want to be reaffirmed in monetary value. You will also be asked for the annual percentage rate, repayment terms, and information about your finances.
Part of this process also involves determining whether the reaffirmed debt will cause you undue hardship. The goal is to figure out whether you will have the financial means after bankruptcy to pay off the reaffirmed debt. A bankruptcy lawyer can help with this process.
Contact Tom Bible Law Today
Figuring out how debt reaffirmation works can be frustrating. Feel free to contact us at Tom Bible Law at (423) 424-3116 for a consultation today about your bankruptcy situation. Our legal team of Tennessee bankruptcy attorneys is ready to help you navigate the complex steps of filing for bankruptcy. We are located in the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.