What Is A Reaffirmation Agreement And Should I Sign It?

A Reaffirmation Agreement is a contract given to you by one of your creditors after you file for Chapter 7 bankruptcy. Before a Reaffirmation Agreement is binding, it must be signed and filed with the Court.  Generally speaking, Reaffirmation Agreements are very, very rarely in your best interests.  In fact, the Atlanta Legal Aid Society has created a packet that details all of the pitfalls of signing a Reaffirmation Agreement.  No need to reinvent the wheel, when the packet can be found here.

For example, say you have a car loan that was listed in your bankruptcy petition. When your petition is filed with the court, the creditor can no longer sue you to collect on that car loan. Of course, the creditor could repossess the vehicle if you do not make timely monthly payments, but the creditor cannot sue you for the balance on the loan. This is a huge benefit of filing for bankruptcy protection! This benefit is extinguished if you sign a Reaffirmation Agreement, and that Agreement is filed with the court. Why? Because you signed and filed a post-filing contract, which reattaches liability to you. If your car gets repossessed after you sign the Reaffirmation Agreement, the creditor now has rights to sue you for the deficiency on your car loan.

Our take on Reaffirmation Agreements is – They only benefit creditors, not you! Remember the goal of filing for bankruptcy protection is to get a “fresh start.” By signing  a Reaffirmation Agreement, you are taking debt into your new financial life.

The lesson of all of this is — consult with your attorney before you sign any contracts after you file for bankruptcy protection.

Van Wieren Law Firm, LLC – Atlanta Bankruptcy

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