When to File Reaffirmation Agreement

If you have filed for bankruptcy and have debts secured by collateral, you may have the option to sign a reaffirmation agreement with your creditor. A reaffirmation agreement is a legally binding document that reaffirms your commitment to pay off a debt. Essentially, it permits you to keep your property even if it is collateral for a debt, such as a car loan, after bankruptcy.

If you are considering signing a reaffirmation agreement, it’s important to understand the timeline involved. Here are some things you should know about when to file a reaffirmation agreement.

The Timing of a Reaffirmation Agreement

Generally speaking, you need to file your reaffirmation agreement with the court no later than 60 days after your initial meeting with creditors. Your initial meeting, also called a 341 meeting, occurs about a month after you filed for bankruptcy. During the meeting, you and your creditors will discuss your financial situation and determine how your debts will be handled.

If you decide to reaffirm a debt, you must file the agreement with the court before the 60-day deadline. If you do not file the agreement within the specified timeline, your creditor may be entitled to repossess the collateral, such as your car or house.

The Risks of Reaffirmation Agreements

Signing a reaffirmation agreement can be risky because you’re essentially agreeing to take on more debt. If you fall behind on your payments, your creditor can take legal action against you, including repossession of the collateral. This means that even if you’ve filed for bankruptcy, you can still lose your property if you don’t make your payments.

Additionally, if you sign a reaffirmation agreement for a car loan and the car is worth less than the amount of the loan, you will still owe the remaining balance after the car is repossessed and sold.

Final Thoughts

In conclusion, if you are considering signing a reaffirmation agreement, it’s important to understand the timeline involved and the risks associated with such an agreement. It’s best to seek the advice of an experienced bankruptcy attorney before making any decisions. If you decide to move forward with a reaffirmation agreement, make sure to file it with the court before the 60-day deadline to avoid any potential consequences.