When filing for a Chapter 7 bankruptcy with an attorney in Salt Lake City, you generally have the option of signing a reaffirmation agreement for certain debts. These agreements state that you will still be personally liable for named debts after bankruptcy. Essentially, they eliminate bankruptcy benefits for that one particular debt. As bankruptcy lawyers, we suggest avoiding reaffirmation agreements unless they are required by the lender in order to keep the property. Here’s why.
Requirements of Signing a Reaffirmation Agreement
When you’re represented by a chapter 7 bankruptcy lawyer, they must look at what your financial status will be after bankruptcy and verify to the court that a reaffirmation agreement won’t cause you unnecessary financial troubles. If your attorney isn’t willing to make that representation in court, you may need to represent yourself. Once you’ve filed your agreement with the court, it must be approved by the judge.
Negative Aspects of Reaffirmation Agreements
Because it’s hard to predict your financial future, we discourage you from filing a reaffirmation agreement unless insisted upon by a lender. Many secured creditors, such as car loan providers, will let you keep your secure property (your vehicle), without a formal agreement, in what’s called the “pay and retain” method. You just have to make your payments on time. While some creditors are moving away from this method in recent years, most will still agree to it, despite not being legally obligated.
Also, a small number of creditors may require you return the property, even if your payments are current. In this case, you may need to file a formal reaffirmation agreement in order to keep possession of your asset. Hiring a chapter 7 bankruptcy attorney in Salt Lake City can help protect your rights and ensure the results are in your best interest.
Mortgage companies don’t often threaten foreclosure on your home if you don’t sign a reaffirmation agreement. In fact, judges in this district in Utah have determined that any attorney that signs a reaffirmation agreement for a mortgage lender can be sued for malpractice. If your mortgage provider requires a reaffirmation agreement to avoid foreclosure, even with up-to-date payments, we will help you take the proper measures to continue pro se.
Cost of an Agreement
In most cases, an attorney’s flat fee will not cover the certification and review of a reaffirmation agreement because they are usually unnecessary. Instead of charging higher prices for every client to cover the possibility of these agreements, most lawyers will keep the cost of filing low and just charge a small fee when a reaffirmation agreement is needed.
Determining what procedures to take during bankruptcy proceedings can be difficult on your own. Don’t let lenders scare you into retaining more debt than you can afford. When you’re thinking of filing for chapter 7 bankruptcy with an attorney in Salt Lake City, call Justin M. Myers at 1-801-505-9679 for a free consultation to discuss your options. You’ll usually find that a reaffirmation agreement is completely unnecessary.