Monday, August 29, 2016

Can I Get Out Of A Reaffirmation Agreement After It Has Been Signed?

When you file bankruptcy one of the things you have to decide on is what things you will keep and continue to pay, and what things you will give back to the lender. Lenders prefer it if you keep their collateral and continue to pay them for it during your bankruptcy. One incentive commonly offered in order to convince debtors to keep making payments is to offer a lower interest rate, but only if the debtor agrees to sign a new agreement to make the payments. This is done through agreeing to reaffirm the debt, and signing a reaffirmation agreement. A reaffirmation agreement is like a new contract, so even after your bankruptcy is over the debt is due and the creditor can call you to collect if you miss a payment.

So while reaffirming a debt can benefit you, like in the case of getting a lower rate and thus a lower payment, it can also have serious consequences. Because the debt remains due after your case is over, it is important to carefully consider your options before agreeing to sign a reaffirmation agreement. However, if you do agree to reaffirm a debt and then change your mind later, you are able to ask that the Court rescind the agreement. This has to be done timely, and with the help of a knowledgeable bankruptcy attorney you can rest easy knowing the deadline will not be missed. But, you do have to take action on your part to put these wheels in motion, including doing the following:

         Immediately telling your attorney you want to rescind the agreement, as soon as you make the decision that you want to get out of the reaffirmation you have signed.

         Provide your attorney with your budget, showing why your finances do not permit you to make the payments under the reaffirmation agreement.

         Ask that your attorney communicate your intent to rescind the agreement to the creditor in question, so you are not contacted by that lender while the request to rescind the agreement is pending before the Court.

If you have questions about what debt to reaffirm and what debt is tied to collateral that you can live without by surrendering to the lender during your case, call our office. We will help you to make choices that meet your needs, and that will benefit you in the long run. We put our focus on helping distressed debtors find solutions to their financial problems and look forward to working with you.

For more information about reaffirmation agreements, call us today or reach us online at We will help by looking at the facts of your case and giving you options to reach your financial goals.

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