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Reaffirmation Agreements in Chapter 7

Our Montgomery, Selma, and Central Alabama bankruptcy attorneys often encounter clients who wish to keep the secured property that they have and still file a Chapter 7 bankruptcy. One way to keep the property is to reaffirm the debt. When you reaffirm a debt, the debtor agrees that they still owe the debt after the bankruptcy case is over. In other words, the creditor's lien on the property and the debtor’s personal liability for the debt survive the Chapter 7 bankruptcy intact. An example would be if you never filed a bankruptcy you would still owe the money.

Reaffirmation provides a sure way for the debtor to keep the property if you abide by the terms of the Reaffirmation Agreement and if you make your payments to that creditor. Reaffirmation also allows the debtor and creditor to come to new terms, or at least can negotiate new terms, which may reduce the debtor’s payment, the debtor's interest rate, or the total amount of money that you owe, and the amount of time that you must pay the debt. This is one of the great advantages to reaffirming your debt in a Chapter 7; however, there are disadvantages to a reaffirmation.

Once you agree to reaffirm the debt you are now personally liable for that debt even though you filed a Chapter 7 bankruptcy. This means that you can't walk away from the debt after your Chapter 7 bankruptcy case is discharged. You are still obligated to pay for this debt and pay for any deficiency balance if the property is repossessed, damaged, or destroyed. Another disadvantage is that because you can only file a Chapter 7 bankruptcy case every eight year you will be stuck with that debt for a very long period of time. For example, if you reaffirm the debt on your truck, and then you default on the payment after the Chapter 7 bankruptcy case the creditor can repossess the vehicle and sell it. The bill that you owe for the difference between what the truck was sold for and what you owe is a deficiency balance. You are now responsible to pay the creditor that deficiency balance, and you can't discharge it in a Chapter 7 bankruptcy for 8 years from the filing of your original Chapter 7 case.

Reaffirmation Agreements may be used with almost any type of property and almost any type of loan; however, the creditor must agree to the new terms of the reaffirmation if those terms are different than the terms of the current agreement. The debtor and the creditor must file the Reaffirmation Agreement in court as part of the Chapter 7 bankruptcy case. The bankruptcy court must next review the Reaffirmation Agreement. Prior to the discharge of the case your bankruptcy judge can approve the agreement if it is in your best interest or can disapprove of the reaffirmation agreement if it is not in your best interest or if it would create an undue hardship. In many instances the bankruptcy judge will reject the agreement if it looks like the debtor will not be able to make the payments on the Reaffirmation Agreement after the debtor pays his or her basic living expenses.

Reaffirmation Agreements come with very serious consequences. A debtor should only consider a Reaffirmation Agreement if the creditor insists on it or if it's the only way to keep the property that the debtor really needs, and the debtor has a good reason to believe that he will be able to pay off the balance. Reaffirmation Agreements are the only practical way to keep automobiles and homes. It is a sensible way to keep property that is worth significantly more than what the debtor owes on the property, and never reaffirm a debt for more than what it would cost for you to replace the property.

Our Montgomery, Selma, Central Alabama bankruptcy attorneys work with debtors and Reaffirmation Agreements every day. We are here to help you. All consultations are always free, and we can usually see you within 24 hours. Our phone lines are answered 24 hours a day! We have offices located in Montgomery, Selma, Greenville, and Troy. Call us or text us at 334-LAWYERS (529-9377) to set an appointment, or you may use the Contact Form on our website. You may also email us at Remember that doing nothing changes nothing so call us today!

The Sellers Law Firm is designated a debt relief agency by an Act of Congress and the President of the United States. We have proudly assisted people seeking relief under the U.S. Bankruptcy Code for four decades.

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Brandon was my first choice for an attorney because he is part of the community and you see him at the local store or PTA meetings and he always has time for you and answer your concerns. Ronica Phifer
The Sellers Law Firm represented me in my social security case, and later in my Chapter 7 bankruptcy. I have been very happy with all that you have done for me, and I refer people to you all the time. Thanks for all that you have done for me and my family. Angie Langford
I would like to start out by saying Brandon sellers is more than a lawyer that has helped my family out in numerous occasions but he's also a great friend to our family. Whenever he can't find a resolution for the problem he always recommends somebody that can. I've known him for years grew up together always been really good friends. I like to say in closing I'm really glad I know him I'm glad he's been able to help us when we've needed him. Thanks for everything you've done. Timothy Palmer
The sellers law firm is the best in Alabama they are friendly and very professional from the attorneys to the people in the office. They where very helpful throughout the whole process and even after it was over. So if you are in need for a bankruptcy firm give Brandon sellers a call you won't be disappointed Thank you Again Brian Floyd
I highly recommend Sellers Law Firm, they are fantastic and care about their clients. They walk you through step by step and advise you of your options. Sheila Wright