A reaffirmation agreement is a contract that a debtor signs with a creditor
to take on an old debt. When going through a Chapter 7 bankruptcy, a debtor
seeks a discharge of debts but there are secured creditors who obtain
a lien on the debtor's property. This means that going through a bankruptcy
will not discharge the lien and the creditor can legally sell the debtor's
property to repay the debt. To prevent this, a debtor can sign a reaffirmation
agreement with the creditor. In order to properly pursue this type of
contract through the bankruptcy court, retain experienced legal guidance
from a Houston bankruptcy lawyer.
When signing a reaffirmation agreement it is important to know the terms
of the agreement because the bankruptcy court requires several disclosures
in the contract terms. Make sure to review all of the terms carefully
with the help of a skilled attorney. Also, you will need to file a statement
including your current income and expenses. The statement needs to show
that you have enough money to complete the payments each month on the
loan or it may not be approved.
Reaffirmation agreements can be beneficial for both the debtor and the
creditor. The creditor will receive money for the property and the debtor
is able to keep the property. This mutually beneficial arrangement oftentimes
causes creditors to compromise and change some of the terms in the original
agreement. The alterations could include reducing the interest, reducing
the complete sum or lowering the payments to make them more affordable.
Creditors are not necessarily eager to repossess your property so with
the help of a Houston bankruptcy attorney you may be able to negotiate
a favorable agreement and keep your property. If you have questions about
a reaffirmation agreement
contact Maida Law Firm, P.C. and schedule a free initial consultation today!