At your bankruptcy case’s close, the New York State bankruptcy court may allow your eligible debts to be discharged. This means that you may no longer be immediately responsible for paying off the outstanding balances of these debts. However, this is unless you sign a reaffirmation agreement(s) with a creditor(s) during your case proceedings. With that said, please read on to discover more about a reaffirmation agreement and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help you decide whether or not to submit to one.
What is a reaffirmation agreement in a bankruptcy case?
Simply put, a reaffirmation agreement is a legally binding contract in which you, the debtor, agree to remain personally liable for a specific debt owed to your creditor. In other words, you must pay off the outstanding balance of this specified debt even after the bankruptcy discharge occurs. This is an entirely voluntary agreement to enter, so you should consult with your hired attorney before putting pen to paper. Even sometimes, the court must approve the final arrangement before it is enacted.
You must understand that this is more than a simple promise to your creditors to pay them back, but rather, it is your legal obligation. That is, a non-payment of your reaffirmed debt may mean that your creditor can pursue collection efforts against you. This may be similar to their activities before your bankruptcy declaration, such as lawsuits, wage garnishments, repossessions, foreclosures, etc.
Why would I want to enter a reaffirmation agreement?
Given the severe consequences of non-payment, you may wonder why you would risk entering a reaffirmation agreement in the first place. Well, if your attorney agrees that doing so would not cause you to enter financial hardship, there may be great benefits to doing so. Predominantly, successfully executing this legal contract may mean that you get to keep property that would have otherwise been seized and liquidated by your bankruptcy trustee in your case proceedings. This is particularly helpful if you have a house and/or vehicle you are unwilling to part with.
As a close second, entering and seeing through a reaffirmation agreement with your creditor may help you maintain a good, healthy working relationship with them. You may be deeply remorseful for falling so behind on your outstanding debt to them, and you may have never intended for this to get so beyond your reasonable control. And so, forgoing a bankruptcy discharge and paying them back may be your way of apologizing for the inconvenience. Better yet, this may make them more willing to give you another loan in the future, even with positive loan terms.
If you desire more clarity before you head into your bankruptcy proceedings, please do not wait any longer to reach out to a competent Rockland County bankruptcy attorney. Retain the services of The Law Offices of Allen A. Kolber, Esq., P.C., today.
