For individuals considering Chapter 7 bankruptcy, the prospect of asset forfeiture can be daunting. However, it’s crucial to recognize the available legal avenues during such trying times. One such option involves establishing a reaffirmation agreement with a creditor. If you are unfamiliar with this concept or unsure if it’s suitable for your bankruptcy case, please continue reading as we explore what you should know about these matters and the importance of consulting our dedicated Wyoming Chapter 7 Bankruptcy Lawyers for guidance.
How Do Reaffirmation Agreements Work in Bankruptcy?
Filing for Chapter 7 bankruptcy in Wyoming can jeopardize your assets, as non-exempt assets will be liquidated to repay outstanding debts. Secured debts, such s mortgages or auto loans, have collateral attached. This means your home could face foreclosure, or your car could be repossessed to satisfy these lenders. Many individuals concerned about retaining their property may instead opt for a Chapter 13 filing, which allows them to keep assets in exchange for a repayment plan, typically spanning three to five years.
A reaffirmation agreement is essentially a contract in which you agree to remain personally liable for a debt that would otherwise be discharged in bankruptcy. It’s a promise to repay the debt despite the bankruptcy filing. You can decide if you want to keep specific property secured by a loan and “reaffirm” new repayment terms. In some cases, you may be able to negotiate a lower total debt in exchange for higher monthly payments or increased interest rates. The primary benefit of this process is the ability to retain assets that would otherwise be liquidated.
The agreement will detail the amount to be repaid and the conditions for keeping the property. It’s important to note that you must request this agreement within 60 days of the meeting of creditors, and the creditor involved must agree to the contract. If the agreement is approved, the debt will no longer be discharged, meaning you will be personally liable for the loan, and the creditor can pursue collection in the event of default.
Do I Have to Sign This Agreement?
When filing for bankruptcy in Wyoming, the necessity of a reaffirmation agreement depends on the unique circumstances of your case. Reaffirmation agreements are not mandatory; it’s a voluntary decision. Before reaffirming, you must assess if such a plan is financially viable alongside your other obligations. If you can meet the terms, signing may be beneficial. However, you should always consult an experienced bankruptcy attorney to explore your legal options before entering into any agreement.
It’s crucial to understand that if collateral central to a reaffirmation agreement is damaged or destroyed, you remain responsible for payments. For instance, if you enter a reaffirmation agreement with your auto lender and then total your vehicle a few months later, you are still legally obligated to make payments as per your contract.
As evidenced, entering into a reaffirmation agreement during bankruptcy is a decision that demands careful consideration. To ensure an agreement aligns with your best interests and to navigate the complexities of this process, the guidance of a seasoned bankruptcy attorney is vital. At 307 Bankruptcy, we strive to simplify bankruptcy for filers. Connect with our firm today for more information.
