who generates an affirmation agreement at chapter 7 bankruptcy? the lawyer or the creditor?

by Krystel Hackett 4 min read

When you filed the bankruptcy, your attorney should have sent the mortgage company a "statement of intention" which says that you wanted to reaffirm the mortgage. The mortgage company then usually sends your attorney a reaffirmation agreement which you would sign and your attorney would file with the court.

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What is a reaffirmation hearing in Chapter 7 bankruptcy?

How Reaffirmation of Debt Works. To reaffirm a debt, you and the creditor agree to the terms of the new debt in a written reaffirmation agreement, which is filed with the court. You must file two court forms: Form 27 (the reaffirmation cover sheet) and …

Can I reaffirm a car loan in Chapter 7 bankruptcy?

7031 Koll Center Pkwy, Pleasanton, CA 94566. master:2022-04-19_10-08-26. When you reaffirm a debt in Chapter 7 bankruptcy, you enter into a contract with your lender (called a reaffirmation agreement) that makes you personally liable for the obligation despite your bankruptcy discharge. Many debtors reaffirm secured debts in order to keep the ...

Can I Sell my personal information in Chapter 7 bankruptcy?

How do I keep my property in Chapter 7 bankruptcy?

Who creates a reaffirmation agreement?

Debtors make reaffirmation agreements purely voluntarily. 2ďťż They are legal documents, but a person cannot go to prison for violating them. If the debtor fails to make their scheduled payments and breaches the agreement, the lender takes possession of the collateral, if they so choose.

How do I reaffirm a Chapter 7?

You and the lender enter into a new contract—usually on the same terms—and submit it to the bankruptcy court. Before you can enter into a reaffirmation agreement, you'll need to be current on the loan. Also, you must be able to protect all of the equity in the property with a bankruptcy exemption.

How do you reaffirm bankruptcy?

A reaffirmation agreement must be entered into before the grant- ing of a discharge and filed with the clerk of the bankruptcy court for it to be valid and binding. An executed reaffirmation agree- ment may be filed by any party, including the debtor or a creditor.

How do you negotiate a reaffirmation agreement?

When making an offer on a reaffirmation agreement, ask the lender to reduce the loan balance and the interest rate. Remember, this is a negotiation. You can expect the lender to come back with a counter offer. So, make your starting offer lower than the amount you are really willing to pay.Nov 3, 2014

What does it mean when a debt is not reaffirmed?

If the debt has not been reaffirmed and there is a default, the lender may only pursue its collateral and will not be able to pursue the individual if there is any money still owing.Oct 12, 2016

What is reaffirmed debt?

A reaffirmed debt remains your personal legal obligation to pay. Your reaffirmed debt is not discharged in your bankruptcy case. That means that if you default on your reaffirmed debt after your bankruptcy case is over, your creditor may be able to take your property or your wages.

What is the purpose of a reaffirmation agreement?

A reaffirmation agreement is a written contract between the debtor filing Chapter 7 bankruptcy and the lender or creditor. When the debtor signs the reaffirmation agreement, they agree to repay the debt on the loan to keep the property, usually a house or car.Mar 11, 2021

What happens if a reaffirmation agreement is denied?

If the Court denies the reaffirmation agreement, you are in technical default again. This is part of the trade‐off between Chapters 7 and 13. In exchange for a quick, efficient, inexpensive discharge of your debts, you give up control over the actions of creditors.Jun 9, 2021

Can you reaffirm unsecured debt Chapter 7?

Reaffirmation agreements are entirely voluntary. No creditor can make you reaffirm a debt. This is because a reaffirmation goes against the most basic upside of filing bankruptcy: the fresh start. You cannot be sent to collections, sued, or garnished on a debt that was discharged in bankruptcy.

How long after Chapter 7 can I refinance my car?

If you've had a bankruptcy discharged, and then successfully took out a bad credit auto loan after, when can you refinance it? You can refinance a post-bankruptcy car loan, but you generally have to wait for at least a year to pass in order to qualify – as is the case for any other auto loan.Sep 1, 2019

Can a car loan be forgiven under Chapter 7?

If you don't want to keep your financed car in Chapter 7 bankruptcy, you can surrender it and discharge the car loan. If you have a car loan or a car lease when you file for Chapter 7 bankruptcy, you must choose to keep the car and continue to pay for it or give it back by "surrendering" the car to the lender.

Can I keep my car without reaffirming?

You can choose to keep the car and continue paying without reaffirming. You take your chances that the lender will repossess the car, but you also keep the benefits of the bankruptcy discharge.

Do you have to give consent to a text message from Martindale-Nolo?

You are not required to provide consent as a condition of service. Attorneys have the option, but are not required, to send text messages to you. You will receive up to 2 messages per week from Martindale-Nolo. Frequency from attorney may vary. Message and data rates may apply.

Do not sell personal information in bankruptcy?

Do Not Sell My Personal Information. When you reaffirm a debt in Chapter 7 bankruptcy, you enter into a contract with your lender (called a reaffirmation agreement) that makes you personally liable for the obligation despite your bankruptcy discharge.

What is a reaffirmation agreement?

When you reaffirm a debt in Chapter 7 bankruptcy, you enter into a contract with your lender (called a reaffirmation agreement) that makes you personally liable for the obligation despite your bankruptcy discharge. Many debtors reaffirm secured debts in order to keep the asset pledged as collateral for the loan ...

Why do you need to reaffirm a secured debt?

Many debtors reaffirm secured debts in order to keep the asset pledged as collateral for the loan (typically a car or other motor vehicle). But in most cases, the court must approve your reaffirmation agreement at a reaffirmation hearing before it will become effective.

What happens when a lender receives a reaffirmation agreement?

When a lender receives your completed reaffirmation agreement, it will file it with the bankruptcy court. The court will then schedule a hearing to discuss the reaffirmation and decide whether or not to approve the agreement. If you want your reaffirmation agreement to be approved, you must appear at your reaffirmation hearing.

Is a second mortgage secured?

(For example, if the balance of your first mortgage exceeds the value of your home, your second mortgage is technically not secure d even if the lender has a lien on the property).

Can a lender foreclose on your property?

Certain courts have held that if you did everything you were supposed to in order to reaffirm the debt, the lender can't foreclose on or repossess your property as long as you continue to make your regular payments. Depending on where you live, the judge may also give you a protective order to that effect.

Can you enter into a reaffirmation agreement before bankruptcy?

Before you can enter into a reaffirmation agreement, you'll need to be current on the loan. Also, you must be able to protect all of the equity in the property with a bankruptcy exemption.

How to reaffirm debt after bankruptcy?

Because reaffirming a debt comes with the disadvantage of leaving you in debt after your bankruptcy case ends, you should consider it only if: 1 the creditor insists on it 2 it's the only way to keep collateral that you need, and 3 you have good reason to believe you'll be able to pay off the balance.

How does bankruptcy help you get out of debt?

Bankruptcy helps you get out of debt by breaking the contract between you and your creditors. Sometimes, however, you'd like to keep a loan in place—especially if you want to retain the property securing the debt, such as a car. Reaffirmation is the process wherein you agree to remain responsible for a debt so that you can keep ...

Is it a good idea to reaffirm a debt?

By contrast, for most people, it's not a good idea to reaffirm a debt for more than what it would cost you to replace the property.

Can you protect your property from bankruptcy?

Also, you must be able to protect all of the equity in the property with a bankruptcy exemption. If you can't exempt all of the property's equity, the trustee will likely sell the asset and use the proceeds to pay your unsecured creditors. (For more information, see Secured Debts in Chapter 7 Bankruptcy: An Overview .)

Do all creditors require a borrower to provide security when making a loan or when providing a service on credit

However, not all creditors require a borrower to provide security when making a loan or when providing a service on credit. An "unsecured" creditor doesn't have a lien interest in collateral, so it cannot take and sell the borrower's property to pay off the debt without doing more.

What are the advantages of reaffirmation?

Reaffirmation provides a sure way to keep collateral as long as you abide by the terms of the reaffirmation agreement and keep up your payments. As long as you stay current on the payment, the lender won't be able to take back the property.

What is Chapter 7 bankruptcy?

As you may know, Chapter 7 bankruptcy is also called liquidation bankruptcy, which refers to the fact that a debtor’s assets (or those assets that are not exempt) are liquidated in order to repay creditors.

Can you reaffirm a Chapter 7 bankruptcy?

In short, a Chapter 7 debtor should never sign a reaffirma tion ...

Can a debtor receive a discharge?

Once the debtor’s estate has been liquidated, she or he can be eligible to receive a discharge of her debts. In practical terms, this means that any non-exempt property is sold, the proceeds are used to pay off debts inasmuch as possible, and then the debtor gets a clean slate for any debts that are dischargeable.

What does it mean when a non-exempt property is sold?

In practical terms, this means that any non-exempt property is sold, the proceeds are used to pay off debts inasmuch as possible, and then the debtor gets a clean slate for any debts that are dischargeable.

What does it mean to continue to pay debt after bankruptcy?

In short, it means you tell the creditor that you will continue to pay on the debt you owe even after you file for bankruptcy and receive a discharge. The creditor will not be paid from the liquidation of the debtor’s assets, and instead the debtor will continue to make payments to the creditor.

Can a creditor be paid from liquidation?

The creditor will not be paid from the liquidation of the debtor’s assets, and instead the debtor will continue to make payments to the creditor. When a debtor signs a reaffirmation agreement, she or he typically still can receive a discharge of any other eligible debts.

What happens when a debtor signs a reaffirmation agreement?

When a debtor signs a reaffirmation agreement, she or he typically still can receive a discharge of any other eligible debts. The reaffirmation agreement essentially creates a new contract for the debt between the debtor and the creditor.

What happens if you file Chapter 7 bankruptcy?

When you receive a Chapter 7 bankruptcy discharge, most of your debts go away, including credit card debts, mortgage, even your car note. The catch is, if you have secured debt, bankruptcy only eliminates your obligation to pay. Your creditors still have the right to seize the property in most circumstances. By reaffirming a debt, it's removed ...

Do you have to reaffirm a house payment in bankruptcy?

You may not need to reaffirm your house payment or car note, even if you want to keep your house or car. All states allow you to keep some of your property even in a Chapter 7 bankruptcy by declaring an exemption. The amount of the exemption varies from state to state.

Can you keep your house if you file for bankruptcy?

It's actually called "reaffirmation," and yes, you may be able to keep your property that way, but there are risks involved.

Can you file for bankruptcy again after reaffirmation?

However, once you file Chapter 7 bankruptcy, you can't file again for eight years.

How long can you file for bankruptcy after filing Chapter 7?

However, once you file Chapter 7 bankruptcy, you can't file again for eight years. That means that your mortgage lender could put you on the street, or the car dealer could repossess your ride, and you would still be on the hook financially until you paid off the debt.

Can creditors seize property?

Your creditors still have the right to seize the property in most circumstances. By reaffirming a debt, it's removed from the discharge, which means you are still obliged to keep making payments. Reaffirmation doesn't apply to Chapter 13 bankruptcy, which restructures your debts rather than wiping them out.

What does it mean to reaffirm a debt?

By reaffirming a debt for, say, your house or your car, you make an agreement with your creditor to continue making payments in exchange for keeping your house or your car. However, you have to be current in your payments when you make the offer to reaffirm, or the bankruptcy trustee will probably nix the idea.

What happens when you take out a loan to buy a car?

When you take out a loan to buy a car, you give the lender a security interest—or a lien —in the vehicle. The lien allows the lender to take the vehicle to satisfy the debt if you stop paying on it.

Do you have to pay a car loan to keep the car?

You Must Pay the Car Loan to Keep the Car. When you take out a loan to buy a car, you give the lender a security interest—or a lien —in the vehicle. The lien allows the lender to take the vehicle to satisfy the debt if you stop paying on it. Filing for Chapter 7 bankruptcy wipes out the contract that obligates you to pay the car lender, ...

How to reaffirm a car loan?

To reaffirm a car loan, you must be able to show the court that the vehicle is necessary and that the payment is reasonable. You must also be able to show that the car payment isn't an undue hardship on your household (you'll still be able to afford the necessities of life). Effect of a reaffirmation agreement.

Can you keep your car if you default on a car loan?

You can keep your car as long as you keep making the payments. However, if you default on the payments, the lender can repossess it and sell it at auction, and you'll be responsible for any remaining balance due under the loan agreement (called a deficiency balance), as well as auction fees. Canceling a reaffirmation agreement.

What happens if you default on a loan?

However, if you default on the payments, the lender can repossess it and sell it at auction, and you'll be responsible for any remaining balance due under the loan agreement (called a deficiency balance), as well as auction fees. Canceling a reaffirmation agreement.

What are the pros and cons of reaffirming a car loan?

Pros and Cons of Reaffirmation. The benefits of reaffirmation include: You secure your interest rate and payment. After a Chapter 7 bankruptcy, obtaining a car loan isn't impossible, but your interest rates will be high, and you will likely only be able to obtain financing through a subprime lender.

What happens if you reaffirm a car loan after bankruptcy?

If you reaffirm the loan and miss payments after your bankruptcy is over, you'll be liable for the loan, including any deficiency balance remaining after the lender repossesses the car and sells it at auction. If you don't reaffirm the loan and surrender the vehicle, however, you won't be liable for a deficiency balance—it will be wiped out in ...

Do you have to include all debt in a reaffirmation letter?

You must include all debt, including your home mortgage. This obligation is on you. Normally the lender will send a reaffirmation letter offer to you or your attorney. However, it is not required. Your lender is not accurate that they cannot solicit a reaffirmation agreement. I see it all the time.

Does bankruptcy discharge your co-borrower?

The bankruptcy discharged the debt as to you, your co-borrower remains 100% responsible for payment of loan. How will a foreclosure effect the co-borrower depends on more facts not disclosed in the question. Report Abuse. Report Abuse.

Can you keep a lien on a house if you file bankruptcy?

The lien securing your loan against the house is not discharged by a bankruptcy discharge; so, no free house that way. This is a frequent question as to cars and homes, but the answer remains that if you want to keep the collateral, you have to keep paying the loan secured by the collateral.

Do you believe your attorney when you do a reaffirmation?

Your attorney has answered your question. for some reason you do not believe your attorney. it is the creditor's responsibility to generate a reaffirmation as the creditor has the information required, not the attorney.

Do you need a reaffirmation letter from a lender?

Normally the lender will send a reaffirmation letter offer to you or your attorney. However, it is not required. Your lender is not accurate that they cannot solicit a reaffirmation agreement. I see it all the time. Debtor's counsel never solicit reaffirmation agreements. I advise my clients not to sign them.

Can you be held personally liable on a mortgage in Texas?

The Texas constitution says you cannot be held personally liable on a mortgage. Therefore, many Texas bankruptcy judges will not approve reaffirmations and the whole debate is meaningless. Report Abuse.

Can you foreclose on a mortgage if you didn't sign a reaffirmation agreement

If you continue to make the payments, the mortgage company can't foreclose. Report Abuse. Report Abuse. Please explain why you are flagging this content:

Is the reaffirmation provision hopelessly flawed?

The reaffirmation provisions are hopelessly flawed. Before 2005 reaffirmation was simple. The debtor signed a relatively short form if he wanted to reaffirm a secured debt. The form had plenty of disclosures on it. It worked just fine for over two decades. And then came the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”).

What is section 524?

The crowning jewel of section 524 is the concept of “undue hardship.” Under the new, 2005 rules, undue hardship is presumed to exist where the debtor’s expenses exceed his income.

Why do attorneys refuse to sign reaffirmation agreements?

Because of this certification requirement, attorneys across the country often refuse to sign reaffirmation agreements on the basis that they are not in a position to determine whether the debtor can make the future payments, and therefore do not want to assume liability for certifying the ability to repay a debt .

Do you need an attorney to sign a reaffirmation agreement?

The act does not require an attorney sign the agreement, but if the attorney does sign, then the signature must include the certification. So because neither of these two things happen with much frequency, reaffirmation agreements usually don’t get entered.

Can a reaffirmation agreement be entered?

So because neither of these two things happen with much frequency, reaffirmation agreements usually don’t get entered. But because the debtor signed the agreement, he’s done everything that’s required of him, and the creditor can’t repossess the collateral–almost always the debtor’s car.

Does bankruptcy have to approve reaffirmation agreements?

The result of the ill-fated tinkering with section 524 is that debtors enter into reaffirmation agreements far less frequently and that courts, now being required to approve reaffirmation agreements when not “certified” by the bankruptcy lawyer, almost never approve them.