Reaffirmation Agreement California Chapter 7

If you are filing for a Chapter 7 bankruptcy in the state of California, you may have come across the term “reaffirmation agreement.” A reaffirmation agreement is a legally binding contract between you, the debtor, and a creditor, in which you agree to repay a debt that would otherwise be discharged in the bankruptcy.

Why Would You Want to Reaffirm a Debt?

Reaffirming a debt can have its advantages and disadvantages. On the one hand, it allows you to keep the property that is secured by the debt, such as a car or a house. On the other hand, it means that you are taking on the responsibility of repaying the debt, even if you could have had it discharged in the bankruptcy.

How Does a Reaffirmation Agreement Work?

In order to enter into a reaffirmation agreement, both you and the creditor must agree to the terms of the agreement and file it with the court. The agreement must state that you understand the consequences of reaffirming the debt and that you are voluntarily choosing to do so.

If the court approves the reaffirmation agreement, it becomes a legally binding contract. This means that if you fail to make the agreed-upon payments, the creditor can take legal action against you to collect the debt.

What Happens if You Don`t Reaffirm a Debt?

If you choose not to reaffirm a debt, it will typically be discharged in the bankruptcy. This means that you will no longer be legally obligated to repay the debt, and the creditor cannot take any legal action against you to collect it.

However, if the debt is secured by property such as a car or a house, the creditor may still be able to repossess or foreclose on that property in order to recover their money. In some cases, you may be able to keep the property by continuing to make payments on the debt, even if you don`t reaffirm it.

It`s important to carefully consider your options when it comes to reaffirming a debt in a Chapter 7 bankruptcy. Consulting with a bankruptcy attorney can help you understand the pros and cons of reaffirmation and make an informed decision.