Reaffirmations: Keep The Debt And Keep The Property

24 July 2018
 Categories: , Blog


Bankruptcy no longer requires filers to actually show up in a formal courtroom setting, but the creditor's meeting comes pretty close to that. This meeting is less formal and intimidating than court, and it serves several purposes. If you have property that you wish to keep but still owe money on you might be able to do so at the creditor's meeting. Read on to learn more about reaffirmations.

Creditor's Meeting Happenings

When these meetings first came about, debtors actually had to meet their creditors face to face, but fortunately, that is a thing of the past. When it comes right down to it, you will seldom see a creditor show up at a creditor's meeting, and when you do you will know about it ahead of time. A legal representative from someone you owe money to, such as a credit card company, might appear if they are disputing your ability to include a certain debt or a certain amount of debt in with your bankruptcy filing. This can happen if the card was used just before filing to gain access to cash advances or to make frivolous charges on the card. The other reason a creditor might appear at this meeting is to reaffirm a debt.

Forfeiture of Property

Chapter 7 bankruptcy contains the potential to lose property if certain conditions are met. The entire idea of this type of bankruptcy is not just to unburden the filer of debt but to find property that can be sold to help satisfy some of that debt. Homes, cars, boats, lake cabins, recreational vehicles, and more can be taken from you if you don't have enough exemptions to protect it. Fortunately, each state provides both homestead and personal property exemptions that remove some of the value on a piece of property and increase the chances of keeping that property.

Affirming a Debt

Not all of your property is of use or interest to the bankruptcy court, particularly that which still has a balance due, and that is where affirmations come in. If you wish to walk away from the debt, then you will likely lose that piece of property, but if you want to keep it, you can complete a reaffirmation of the debt. With this legal document, you agree to continue making payments as agreed and keep that property. Reaffirmations are great for vehicles since it's something you want and need to keep and that you are willing to continue paying. At the end of the payment period, the item is yours to keep.

Speak to an attorney specializing in bankruptcy law about reaffirmations.