Debt Reaffirmation in Bankruptcy

Reaffirmation of debt is an agreement during bankruptcy for you to remain legally obligated to repay the debt. By signing this agreement, you are giving the creditor the right to collect from you even if your debt is discharged in bankruptcy. It is rarely a good idea for the debtor to agree to sign a reaffirmation agreement. You can decline if a creditor asks you to sign one of these agreements.

Signing a Reaffirmation of Debt

Might be a good idea if:

You can easily afford the payments after the bankruptcy is over.
The creditor agrees to let you get caught up in a manageable way.
The creditor reduces the debt to the value of the property instead of what is due on loan.

Might not be a good idea if:

The creditor cannot prove the debt is secured.
The debt is unsecured, like credit cards or medical debt.
You wish to relinquish the secured collateral.
You are so far behind in payments that you are about to lose it to repossession.
The court allows you to keep the property without a reaffirmation agreement.

Credit Cards

It is rarely a good idea to reaffirm credit card debt. They might offer you an attractive offer, but considering the continuing interest rate or length of the repayment, it’s better to allow the debt to be eliminated in bankruptcy.

If you have more questions about bankruptcy, contact a Dallas bankruptcy attorney to find out how you can get your qualifying debt eliminated.