When must a reaffirmation agreement be signed?

The Bankruptcy Reform Act of 2005 states that any reaffirmation agreement(s) must be entered into prior to the filing of a discharge in bankruptcy and before the debtor actually receives the many disclosures required from his creditor. The document must also be approved by the court and not rescinded by the debtor prior to the discharge being filed. The court can also refuse to sign the reaffirmation agreement if it is of the opinion that the debtor cannot afford the payments called for under its terms.

Some creditors believe that the new 2005 bankruptcy law requires that a debtor sign a reaffirmation agreement if they want to retain the vehicle. However § 524(c) states that any obligation must be ‘enforceable under applicable non-bankruptcy laws, whether or not such a debt is waived.” As a result, if the debtor is current on his payments, keeps his vehicle insured and still refuses to sign a reaffirmation agreement, there appears no default that is enforceable under non-bankruptcy laws. Moreover, most bankruptcy judges are anything but eager to sign such an agreement if the debtor can’t or doesn’t want to afford the extra payment. Neither would most attorneys. Thus, the smart debtor doesn’t sign a reaffirmation agreement unless it includes better terms on a new contract and he is certainly permitted to do so.

The best advice

As a debtor, there seems little risk in signing a reaffirmation agreement provided that you feel you really need the property (such as a car to get you to and from a job) and unless you know you can’t afford the payment. Nevertheless, you have nothing to lose if you try to renegotiate your contract before you sign and don’t forget that if you’ve had the property for some time, its current value is less. The lender will very likely go along with your suggestions because it is to his advantage financially.

In the end, whether or not you sign a reaffirmation agreement comes down to how badly you want the property and whether or not you can afford to continue the monthly payments. If you need the property and the money is there, go ahead and sign. If not, let the property go and start over to rebuild your financial status with a really clean slate. Only you can make an informed decision.

You should try to avoid Bankruptcy at all costs!

You have no money, which is why you’re filing for bankruptcy, yet it costs money to file bankruptcy. There really is not such thing as a free lunch! (and Bankruptcy is no free lunch, let me tell you)

Bankruptcy Costs

The us bankruptcy courts have filing fees. The cost of bankruptcy chapter 7 is a filing fee of $299, Chapter 13′s filing fee is $274. On top of that you have…

Attorney Fees

That’s not so bad, right? Well, hold your horses, that doesn’t include a lawyer!

Look, I had enough trouble just filling out the paperwork that my lawyer gave me. I can’t imagine trying to fill out and gather all the necessary paperwork and deal with the trustee all by myself.

When you’re thinking about Bankruptcy, it’s likely you’re very stressed (I know I was…heck, I still am). Most lawyers will have an option to pay their fee in installments. If they don’t….move on.

That said, I wouldn’t recommend the cheapest lawyer in your area either. I’d look for perhaps newly on their own bankruptcy attorney. Often new lawyers will work at a large firm out of Law School for a few years, then strike out on their own practice.

My experience with my lawyer was that although she was younger, she was very experienced (had worked at a large firm for a few years), but not outrageously expensive because her own practice was fairly new. Obviously this is just my two cents, most Bankruptcy attorneys will give you a free initial meeting. Setup 3-4 in a day, and see who you feel most comfortable working with and who is willing to work with your financial situation.

You’re going to end up paying anywhere from $700-$2000 to file Chapter 7, depending on what area of the country you are in. In my opinion having a lawyer severely lowered my stress during this whole process.

Setup a free evaluation. Best thing I did

A local bankruptcy attorney can help you understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy, so that you can make an educated decision about the best next step for you. Fill out the form below for a free bankruptcy case evaluation.

I had my “meeting of creditors” today in US bankruptcy court.

One word to describe the whole thing?

Awkward

You’re in this room with a dozen other “debtors” and the awkwardness is as thick as pea soup. I think my meeting with the trustee went fine, in fact, it was not nearly as stressful as I thought it might be.

Payments to Family

I figured the payments to my mother might come up, and they did. When I explained why I send money each month, he replied, “She must have raised you right”. And that was the end of it. I nearly cried. He could have chosen to maybe go after my mother, but I don’t see that happening based on his response.

Back to the awkwardness…

So, there is this (attractive) girl with her lawyer there. All I can think is, “I wonder how she ended up here…” Likely she was thinking the same about myself. The rest of the debtors were mostly middle-aged, and everyone looked nervous.

341 Meeting

I’m glad this 341 meeting thing is done. Assuming no other hangups, my Chapter 7 bankruptcy should be done in a few months. I still need to do the online financial education part, but I’m pretty sure that will be a piece of cake.

I got a little emotional once I got back to my car. Just one more stop along my journey…