Understanding the Reaffirmation Process in Bankruptcy
Chapter 7 Bankruptcy Reaffirmation
Good morning everybody. Edward Kelley here, your Oklahoma City bankruptcy attorney with Three Minutes to Financial Freedom. Today we’re going to talk about reaffirmations in a Chapter 7 bankruptcy.
Pretty straightforward, but here’s how it works. You’re going to get rid of all your unsecured debts that you possibly can in a Chapter 7. However, you may want to hold on to some of your secured debts. Secured, as you’ll recall, means it’s got some collateral tied to it. Usually we’re talking about a car note. So if you’ve got a car, you’ve been paying on it for a long time, you’re current, you’ve got some equity on it, you want to keep it.
So you’re going to need to pull that loan back out of bankruptcy if you want to be absolutely safe. Sometimes you can go ahead and discharge your personal liability, but as long as you make the car payments, the lender will be okay. But bear in mind, this is very important, if you don’t sign a reaffirmation agreement bringing the debt out of bankruptcy and not discharging it, the creditor can repossess the car even if you’re current. And that can be a big surprise for some people who’ve made all their payments.
Understanding Reaffirmation Agreements
A reaffirmation, the creditor, the lender, your car finance company, sends an agreement to me as your attorney and says, here’s the terms, the interest rate, do they want to reaffirm it? I give it to you, you look it over, and if you do, you sign it, I send it back to the creditor and they file it. And then that car note is taken back out of the bankruptcy.
Now in another video, we’ll talk about sometimes you can negotiate some terms. You may have a terrible interest rate on that car note and you tell the creditor, well, I’ll reaffirm it, but I want a better interest rate. And again, we’ll discuss that in another video. But reaffirmation can work for any personal property. So if you’ve got furniture loan that comes up a lot, Mathis Brothers, or you’ve got a boat or anything where there’s some collateral tied to it, you can reaffirm it. But you got to file it with the court and you got to do it before the case closes within 90 days from the date of filing.
Get a Free Consultation Today
As always, you can reach me at oklahomacitybankruptcyattorney.pro. If you’re considering a Chapter 7 bankruptcy and want to learn more about reaffirmation agreements, give me a call at (405) 563-7888 to schedule a free consultation. I’m here to help you navigate the bankruptcy process and make informed decisions about your financial future.