Anyone familiar with the re-affirmation process when in bankruptcy

[notadmblnd]

I understand that you have to re-affirm your debt with the debtor if you not filing bankruptcy on say your home. What I'm wondering is- what is the purpose of this? If this was not done, what can or can not happen in the future?

[DJ13]

1. The simply affirms you recognize you still owe the debt

If the debtor fails to follow through and pay that debt after the bankruptcy that is an open invitation to being sued in civil court by the debt holder.

[notadmblnd]

6. but what are the ramifications if the debt wasn't reaffirmed

and the person that owes defaults?

[elehhhhna]

15. they take the house / car whatever , although --

I BK'd in '01 (thanks GW*) and though I reaffirmed my Dodge Intrepid (worst. car. ever), when the engine blew and I still owed 5 payments, I called them and they said "we're sending the tilte, dispose of it how you wish".

[PeaceNikki]

2. I don't know a single attorney who'd dispense legal advice on a message board.

And anyone who's not an attorney skilled in bankruptcy law is not qualified to answer your question.

You should consult an attorney and/or legal aid.

[FBaggins]

4. There's a big difference between answering the question and giving "advice"

The answer to the question is quite simple and doesn't involve advice (i.e., whether or not to do it in the OP's case).

In broad terms, a reaffirmation of debt is done for secured loans where the borrower would like to keep the collateral after declaring bankruptcy. If you reaffirm a debt (say... to avoid your car being repossessed) and then later fail to make payments... you can't get that debt discharged. If you elect NOT to reaffirm the debt, the lender may take the car... but if the car is worth far less than the loan, they wouldn't be able to get the rest of their money back.

Legal representation is important, because many people later say that they were tricked into reaffirming debts that they didn't need to (and because laws vary from state to state).

[notadmblnd]

8. Thank you that sort of answers my question

So if the debt was never reaffirmed, and the person gives the property back, they are no longer responsible for the debt? doI understand that right?

[taterguy]

9. Your answer completely ignores the ramifications of Section 801(1)(a)(3)

Of the recently revised United States Bankruptcy Code.

Where the hell did you go to law school?

[FBaggins]

10. The OPs question didn't require going there.

Better disclosure requirements don't mean that people won't feel that they were "tricked" (and in some areas the compliance rate is lower than one might prefer).

None of it impacts what a reaffirmation is and what can happen if you default on the debt later on... which was all the OP was looking to find out. Getting enough information to determine whether "undue hardship" exists would almost certainly involve giving legal advice and was not called for.

[taterguy]

11. You haven't actually read Section 801(1)(a)(3) have you?

Just admit it.

[FBaggins]

12. You don't actually have a point, do you?

If you did... you would have made it by now.

Just admit it.

[taterguy]

13. In other words you haven't actually read that section

I suspected as much

[FBaggins]

16. Lol... you're full of it, aren't you?

Do you really think that those kinds of posts make you look smarter?

Yes... I'm familiar with recent changes to bankruptcy laws and how they may impact reaffirmations. There's nothing in those changes that impacts the OP's question. It doesn't do him any good to know that he can canel a reaffirmation within 60 days of filing it... or that they need to do a better job of disclosing then they had to pre-2005... or that the court might help him understand it if he didn't hire an attorney.

The OP asked merely what they were and what the ramification could be if he accepted one and then later defaulted. If you have some reason to believe that this simple question was answered incorrectly... by all means put up or shut up.

Or better yet... why not repost "you really are clueless aren't you?" or similar nonsense. Then we can pretend that someone here actually fell for it. I'm sure nobody will notice the faulty citation.

[taterguy]

17. My citation is just fine thank you very much

I learned it on the Internet!

[FBaggins]

18. The two options were "put up" and "shut up"... lol

I had a feeling it was a google thing. A section with no Title?

[notadmblnd]

7. It's not that big of a deal

i just wanted to know if anyone knows what happens if the debt is not reaffirmed and then defaulted on?

[Lydia Leftcoast]

3. Many bankruptcy attorneys offer a free initial consultation and

don't require you to pay unless you officially retain them. (Voice of experience here.)

Look in the Yellow Pages to find one.

[Statistical]

5. reaffirm the debt means keep the debt post BK.

Generally you do this because the debt is collateral secured (home, car, boat).

If you have a car loan for example and do NOT reaffirm it the loan goes away however the bank will likely seize the car. Now you may want that to happen however if you don't have the cash it may be difficult to get new loan post BK so you may need to reaffirm.

This is something to discuss w/ BK attorney.

You can also reaffirm on non-collaterized debt but this is less common. Say you have a CC w/ credit union and only owe $500 on it and it has good interest rate & $20,000 limit. You can reaffirm the debt to keep the account open (which may be useful post BK when credit is tight).

The third scenario is when there is a co-signer. Your BK doesn't relieve the co-signer of obligation. You may want to reaffirm the debt to avoid hurting credit of co-signer.

Generally speaking thought all (as in 100%) of debts MUST ABSOLUTELY MUST BE IN BANKRUPTCY. Do do otherwise is FRAUD. Once all are in bankruptcy you can CHOOSE to reaffirm some (or none) of those debts.

[gleaner]

14. I don't know how it works under the new laws ....

now in force. Under the old law the bankruptcy wiped out the debt unless it was a Chapter 13 (wage earner's bankruptcy) where the court came up with a payment schedule to repay all of the creditors in a specific period of time under court supervision. Chapter 7 in effect, canceled the debt. If you reaffirmed with a specific creditor or creditors they were entitled to collect what you owed anyway even if you were granted a judgment into bankruptcy.

I would suggest that you call a non profit credit counseling agency and see what reaffirming means under the new law. If you don't have to reaffirm consider that you are paying the debt by trading it for a derogatory on your credit for however long the law allows now. But once that period is over the credit report should be wiped and the derogatory should disappear. Again, bear in mind this is the way it used to be when I was working with bankruptcies. It is different now, so please find out from someone with current knowledge.