Mortgage companies will attempt to have a debtor sign a reaffirmation agreement during a Chapter 7 Bankruptcy case. Most of the time, it is not advisable to sign a Mortgage Reaffirmation agreement. Think about it. When a debtor files a Chapter 7 bankruptcy, all of his/her debt is discharged. Why would you want to “guarantee” that you are liable on a mortgage debt after bankruptcy. It completely defeats the whole purpose in filing bankruptcy in the first place. A debtor files bankruptcy to “discharge” debt. In a Chapter 7 bankruptcy, a debtor can surrender the home and walk away without
Chapter 7 Reaffirmation Agreement Reaffirmation agreement is a contract entered into during a Chapter 7 bankruptcy case which stops the particular debt from being discharged. It creates an obligation to repay that debt after the bankruptcy case is completed. Typically, only secured debts are reaffirmed in order to allow the debtor to retain the collateral. Under the amendments to the Bankruptcy Code, secured creditors can treat the filing of the bankruptcy as a default and use that as a basis to repossess their collateral (such as an automobile) after the bankruptcy case is over, if applicable state law allows it.
Making the Most of Your Bankruptcy Discharge Bankruptcy is a choice that may help if you are facing serious financial problems. You may be able to cancel your debts, stop collection calls, and get a fresh financial start. Although bankruptcy can help with some financial problems, its effects are not permanent. If you choose bankruptcy, you should take advantage of the fresh start it offers and then make careful decisions about future borrowing and credit, so you won’t ever need to file bankruptcy again! How Long Will Bankruptcy Stay on My Credit Report? The results of your bankruptcy case will