A reaffirmation agreement is an agreement by which the debtor agrees to remain personally liable for a debt post-bankruptcy. A reaffirmation agreement essentially eliminates the benefit of filing for bankruptcy in Salt Lake or one specific debt. Because reaffirming a debt undermines the most basic benefit of filing for bankruptcy in Salt Lake, you should seek counsel from an experienced Salt Lake bankruptcy lawyer before entering into a reaffirmation agreement. A Salt Lake Chapter 7 bankruptcy lawyer must review your financial position following bankruptcy in Salt Lake and certify to the bankruptcy court that entering into the reaffirmation agreement will not cause an undue financial hardship. The Salt Lake bankruptcy judge must also approve the agreement.
As a Salt Lake Bankruptcy lawyer, it is difficult to predict a person’s financial future. Therefore, our experienced Salt Lake bankruptcy lawyers generally discourage our clients from entering into a reaffirmation agreement…unless absolutely necessary.
Most secured creditors with whom a reaffirmation agreement would arise arise—automobile lenders—generally allow you to keep the secure property (automobile) without entering into a formal reaffirmation agreement, so long as you keep your payments current. We call this the “pay and retain” method. While a creditor is not legally obligated, our experience is that most secured creditors will agree to the pay and retain method.
While the pay and retain method works well with most secured creditors, there are a minority of creditors who take the extreme position to repossess the secured property even if you are current. America First Credit Union is one of these creditors. In cases that deal with AFCU or other creditors who take the same position, it may be necessary to enter into the reaffirmation agreement in order to retain possession of the secured asset.
As mentioned, the best way to ensure that your rights and best interest is protected is to consult with an experienced Salt Lake bankruptcy lawyer. Schedule your free consultation today.