Reaffirmation by conduct occurs when the bankrupt continues to make payments to creditors notwithstanding the fact that the relevant obligations have been paid in full. When bankrupts get into written arrangements with creditors to repay debts, even if the debts were discharged, they are reaffirming their debts by express consent.
What does reaffirmation of debt mean?
The status of “included in bankruptcy” should no longer appear on your credit report when a debt has been reaffirmed and paid. When you reaffirm a debt, you agree to continue making payments on the account rather than putting it in your bankruptcy.
How Long Does Bankruptcy Stay on Your Credit Report?
Bankruptcies under Chapter 7 and Chapter 13 are the two most popular kinds of filing for bankruptcy protection in the US. You repay a portion of your debts in a Chapter 13 bankruptcy. When a person files for Chapter 13, the credit record will show up for seven years from the date of filing.
If you file for Chapter 7 bankruptcy, you will not have to pay back any of your debts. Bankruptcies filed under Chapter 7 remain on your credit report for a period of ten years after the date of filing.
Bankruptcy includes all accounts, save those that have been late for seven years previous to filing, in which case they are removed seven years after the account became delinquent. Prior to the bankruptcy being made public, most people’s bank accounts will be deleted.
Your bankruptcy was filed at least 10 years ago, but you didn’t specify the exact date. Therefore, you should remove all references to your bankruptcy, including any accounts included in or discharged as a result of the proceedings.
What Happens When You Reaffirm an Account
After seven years, bankruptcy-related accounts are deleted, but positive accounts survive for a further 10 years.
Your automobile loan should no longer be included in your bankruptcy if you reaffirmed it. You can keep the loan on your credit report for a maximum of 10 years after it was paid in full and there were no late payments.
Because these accounts are favorable to your credit history, they will remain on your credit report for a longer period of time.
Requesting a Free Experian Credit Report
Obtain a copy of your Experian credit report if you haven’t done so before to check how the account appears. AnnualCreditReport.com or Experian can provide you with a free copy of your credit report once a year. You can get a free copy of your Experian report if you’ve been subjected to a negative outcome as a result of the information in your file.
Disputing Bankruptcy Information on Your Credit Report
Make sure you thoroughly review your report. You can dispute false information about your bankruptcy online, over the phone, or by mail by following the guidelines provided in the report. Along with the reaffirmation of debt and a copy of your bankruptcy petition and discharge documents (Schedule A, D, or F), you can also include documentation of your bankruptcy filing and discharge. Doing so will assist Experian in updating your credit history.
Why would a person reaffirm a debt?
Others prefer to continue making their loan payments without the official reaffirmation procedure. Reaffirmation, on the other hand, provides some advantages for the borrower. There are credit reporting companies that record the fact that the borrower is paying on-time payments when he or she has reaffirmed an existing debt.
Rebuilding one’s credit after bankruptcy can be made easier with this method. However, if a borrower does not reaffirm a debt, their payments will not appear on their credit record.
There is no benefit to reaffirming debts for borrowers who just want to get rid of their debts and have no intention of making regular payments. It is permissible for a borrower to safeguard themselves and their assets by reaffirming a debt, as it is arranged through a formal agreement with the courts.
When attempting to settle or manage financial commitments, it is in the borrower’s best interest to go through a legal process such as reaffirmation.
What is the purpose of a reaffirmation agreement?
An agreement between a creditor and the debtor that waives the bankruptcy discharge of a debt is referred to as a reaffirmation agreement in United States bankruptcy law. In the event of a properly negotiated, timely reaffirmed agreement, the discharge is modified so that it no longer applies to the relevant debt. 11 U.S.C. 524 contains the bulk of the statutes governing reaffirmation agreements (c).
How does reaffirmation agreement work?
There is no obligation to sign a reaffirmation agreement. There is no obligation for a debtor to reaffirm any of their debts. To avoid bankruptcy, the debtor agrees to pay off a debt that would have been dismissed had the debtor not signed the agreement.
Reaffirming Helps Rebuild Your Credit
Your vehicle lender won’t record your post-bankruptcy payments to any credit reporting agencies because a bankruptcy wipes out the auto loan but not the lender’s security interest in the car. In other words, making on-time payments will not help you rebuild your credit after bankruptcy. Your lender will continue reporting payments if you reaffirm the loan.
Reaffirmed Loans Might Have Better Terms
The best option is to reaffirm if you can get a better deal from the lender. It is possible to alter the terms of your original agreement in a reaffirmation agreement, since it is a new contract (however, most are on the same terms). To make a reaffirmation more appealing, a car lender may lower the principal balance or interest rate.
Reaffirmation Provides Certainty Against Repossession
Your automobile may be repossessed by the lender if you do not sign a reaffirmation agreement when your case is closed and the automatic stay is lifted. Even if you are current on your automobile payments, some car lenders are known to promptly repossess the vehicle. If you fail to make a payment, you can expect a repossession in all situations. As long as you keep up with your payments, reaffirming your car loan will guarantee that the lender will not repossess your vehicle.
What happens if I don’t reaffirm my mortgage?
Legally binding agreement between you and a secured creditor, the reaffirmation agreement It is between you and the lender of your mortgage that the agreement is made. Unless otherwise stated in the agreement, you undertake to pay a loan in accordance with its original terms and circumstances. It’s a guarantee that you’ll honor if you lose your house in a fire or a foreclosure sale occurs because of non-payment or some other breach of contract.
To avoid bankruptcy, debtors must give up or reaffirm their mortgages and car loans. However, if you continue to make your mortgage payments on schedule, your mortgage company may not press the issue.
The debt represented by the promissory note is dismissed in your bankruptcy case if you do not reaffirm the mortgage. The mortgage, on the other hand, serves as a security interest in your home for the benefit of your lender. If you fail to make your mortgage payments, the lender can foreclose on the property and begin the foreclosure process. In some situations, the mortgage lender may agree to modify some of the terms of the loan in order to assist you keep your house, but it is not legally required to do so.
What does it mean when a debt is not reaffirmed?
Agreements formed between creditors and debtors that waive bankruptcy discharges are known as “reaffirmation agreements,” or “reaffirmations,” respectively. Debtors who fail to reaffirm their home loans will no longer appear on their credit reports.
Can I reaffirm debt after discharge?
Reaffirmation of debt can only be taken into prior to a debt being discharged. It is required that you sign and file a reaffirmation agreement with the court.
Reaffirmation agreements are required by the Bankruptcy Code to provide a wide range of disclosures. The disclosures must also inform you of:
- Your personal responsibility for the debt will not be discharged in bankruptcy.
Sign and file a statement of your current income and expenses with the disclosures. Income-paying expenses are sufficient to cover the reaffirmed debt, as shown by the balance of income-paying expenses.
Can a creditor refuse a reaffirmation agreement?
Reaffirmation agreement tracking is quite crucial. Generally speaking, the procedure goes without a hitch. When it comes to getting the agreement via the legal system, your lawyer is under pressure. For the most of the reaffirmation procedure, the agreement will remain outside of the lawyer’s office and out of his supervision.
It may be necessary for your lawyer to contact the creditor if the agreement gets stuck in a stack of paperwork. The reaffirmation agreement will be sent to you within six weeks after your filing date. To ensure that everyone is aware of your agreement, you should include this in your contract. It is important to keep in mind, however, that we cannot force a creditor to agree. On your behalf, we can only ask for your permission.
- Reaffirming your debt puts you personally on the responsibility for it, even if you have been discharged from bankruptcy.
- If the reaffirmation is not in your best interest, the Court may not allow it.
- You and the creditor both have the option of agreeing to a reaffirmation, but the creditor can choose not to.
- The agreement must be examined, signed, and submitted as fast as possible by all parties.
You can call Garrett Law LLC at (888) 253-4526 if you are considering bankruptcy in Topeka, KS, and we can help you get out of serious debt. Many families across the Midwest have relied on our services for more than a decade now.
Can I reaffirm a debt in Chapter 13?
Chapter 13 debtors have the option of reaffirming debt, but they are more likely to employ 11 U.S.C. 1322 and 1325 to modify and restructure debt to fit their budgets.
What are the legal requirements of a reaffirmation agreement?
If the debtor agrees to a reaffirmation, they must sign an affidavit stating that they understand the legal repercussions of doing so and that doing so will not put them or any of their dependents at undue financial risk.
