The idea behind bankruptcy is either discharging all or part of your debt (Chapter 7), which means erasing it altogether or reorganizing your debt in an effort to make it more manageable (Chapter 13). Under certain circumstances, however, you may want to continue paying a debt to retain the asset, such as your car, which correlates more closely with Chapter 7 bankruptcy, in which individuals discharge – or get rid of – unsecured debt. If you’re considering bankruptcy, it’s time to consult with an experienced South Carolina bankruptcy attorney.
The Reaffirmation Agreement
Reaffirmation agreements are voluntary, and if you enter one, you’re legally obligated to pay back some or all of the associated debt on the account in question – rather than discharging it through your Chapter 7 bankruptcy. In other words, a reaffirmation agreement applies to a secured debt that could be discharged but would mean foregoing the related asset, such as one’s car. With a reaffirmation agreement, the individual seeking bankruptcy chooses to retain the asset addressed in the agreement.
Your reaffirmation agreement document will include important information like the following:
- The amount of debt that you’re reaffirming
- Your repayment terms
- The annual interest rate that applies
- Information about collateral – as applicable
- Any additional terms or conditions
The timeline for filing a reaffirmation agreement is within 60 days of the first meeting of creditors. After submission, the agreement must be approved by the creditor, but it won’t be approved by the court until you reach immediate discharge eligibility. Further, once you file your reaffirmation agreement, you’ll have only 60 days from that date or from the discharge date – whichever is later – to change your mind on the matter.
What It Means for You
Your reaffirmation agreement removes the specific debt from your bankruptcy discharge, which means that you are legally required to make the payments outlined in the agreement. If you seek a Chapter 7 bankruptcy, you can discharge a considerable amount of unsecured debt, but you could lose your secured assets, which generally include your home and your vehicle. Your home and your car are obviously of primary importance, and a reaffirmation agreement can ensure that you don’t lose either. It’s important to note, however, that these agreements represent serious financial commitments. As such, carefully assessing your ability to keep up with the payments outlined is key to maximizing the benefits of your Chapter 7 bankruptcy and protecting your future credit score.
Reach Out to an Experienced South Carolina Bankruptcy Attorney Today
If you’re facing bankruptcy, retaining specific assets through reaffirmation agreements can help secure your financial future, and the savvy South Carolina bankruptcy attorneys at Reed Law Firm can help. Our well-respected legal team is on your side and will employ the full force of our formidable experience in pursuit of your case’s optimal outcome – paving the way toward a more secure financial future. To learn more, please contact us online or call 803-855-1774 in Columbia, South Carolina, or at 843-418-9004 in Florence, South Carolina, today.
