Reaffirming Debts Could Be an Option in Bankruptcy

Reaffirming Debts Could Be an Option in Bankruptcy

Bankruptcy is the last available option of borrowers who can not get out of the debt burden. When filing for bankruptcy, you need to explore debt reaffirmation. This is an agreement that allows you to retain your assets but you have to repay certain debts.

Reaffirmation of debts is an option when you file for bankruptcy. For many people, the process may seem too complicated and daunting. This is the reason why you need to get the help of a bankruptcy attorney in your area. A lawyer who specializes on bankruptcy laws will know how to navigate through the entire process. Your bankruptcy attorney can provide valuable help in making a plan for you during bankruptcy filing.

When you file for bankruptcy, an automatic stay is immediately put into place. An automatic stay means that the court is ordering your creditors to immediately cease all collection efforts. These include collection efforts through phone calls, letters, and garnishment of your wage. The stay will be in place for months as long as the case is proceeding. Bankruptcy laws allow you to discharge some unsecured debts. In most cases, you will be able to keep your assets but you have to repay them based on an affordable payment plan. But you have to remember that this option is determined based on the unique circumstances of the debtor.

When you enter into a reaffirmation agreement, you are obligated to repay the debts. In return, you will be allowed to keep your assets. In this case, your bankruptcy lawyer can help you determine the actual value of the assets that you want to keep. This is a good way to determine if they are worth less than what you owe. The value of the assets is one of the biggest factors that you need to consider when reaffirming your debts.

Another option available for you is to strike a deal with your creditors. This is an arrangement that will allow you to repay your debts and continue owning the assets but without the benefit of a formal written agreement. Such option is basically not part of the formal bankruptcy filing. As such, it is not covered by the bankruptcy laws which provide a rule on how debts should be handled. You have to discuss this special option with your attorney in order to find out if it is applicable to your situation.

Bankruptcy negotiation, especially when it concerns real estate, is best handled by a professional lawyer. Your decision to reaffirm your mortgage debts for example should be determined by the amount of equity you have and your future financial situation. You will not experience any problem with reaffirmation if you can keep your payments current. But you have to keep in mind that creditors are very strict when enforcing the terms of the agreements such as keeping up with the insurance and taxes. A violation of the terms could lead to serious consequences such as foreclosure. When you reaffirm your debts, the creditors can also resume their collection efforts.

A lawyer can help you get through the sticky issues of bankruptcy. Look for bankruptcy lawyers in your area and get free consultations from them. Get to know the facts about bankruptcy and ask if you have options that will enable you to eliminate your debts.

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