What are the disadvantages of signing a reaffirmation agreement?
Signing a reaffirmation agreement can be risky. The main reason most people file a Chapter 7 is to get out of debt. Signing a reaffirmation agreement defeats that purpose by keeping a debt that could otherwise be discharged. Here are some important things to consider before signing a reaffirmation agreement:
A "reaffirmation agreement" is a contract between you and a creditor in your Chapter 7 bankruptcy case. Signing this contract prevents the debt you have with a specific creditor from being discharged. In other words, this contract allows you to treat a debt as if you hadn't filed for bankruptcy. Once you have filed a Chapter 7 bankruptcy petition, deciding whether to reaffirm debt is often one of the most complicated and important decisions you will have to make during your case. Usually, you will be deciding whether to sign secured debts such as mortgage loans, car loans, or other debts secured by collateral you own.
Deciding whether to sign a reaffirmation agreement is an important decision. Having an attorney help guide you through the process is often of critical importance. We are here to help our clients understand how reaffirmation agreements work, and to give advice about whether signing a reaffirmation agreement makes sense for you.
What are the benefits of signing a reaffirmation agreement?