Reaffirmation Agreements

Multnomah, Clackamas, and Washington County Bankruptcy Attorneys

Advising Individuals, Families, and Small Businesses for over 40 Years

When you purchase a home or a car, in most cases the lender takes what is known as a “security interest” in the home or car when loaning you the money to make the purchase. The purchased item then serves as collateral for the loan. When the lender takes a security interest, it can take back the collateral if you fail to make the required payments.

If you are current on the payments on such a loan and can afford to continue to make the payments you can enter into an agreement with the creditor to continue to pay that debt, even though you are filing for bankruptcy. That agreement is called a Reaffirmation Agreement, and it renews your promise to pay the debt in exchange for being allowed to keep the property. Reaffirmation Agreements only apply when there is property that secures the loan, like a house, car, computer, or even tires. You cannot reaffirm a debt to a medical provider or family friend because there is usually no property involved with that debt.

In some cases, the court requires you to attend a hearing to determine whether signing the Reaffirmation Agreement is in your financial best interest. At the hearing the judge will ask you questions about the loan and your income before determining whether he or she feels it is in your best interest to reaffirm the loan. If the judge decides it is in your financial best interest, he or she will approve the agreement and you will be obligated to pay the loan in full even if later on you cannot afford to make payments and the creditor repossesses the vehicle or other property.

If the judge decides it is not in your financial best interest to reaffirm the loan, in most cases you can still keep the property as long as you are current on the payments and continue to make timely payments. However, if you become unable to pay the loan at a later date, the lender can repossess the property but cannot seek further payment from you or sue you to collect the balance of the loan.

The bankruptcy attorneys at Owens / Pinzelik, P.C. can help you determine whether a Reaffirmation Agreement works for your situation. Let our professionals help you today by calling 503.224.3100 or contact us online.

Our initial bankruptcy consultations are FREE. Call now to schedule your free no obligation consultation and find out if our bankruptcy attorneys can help you and your family.

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy code. These materials have been prepared and are provided for informational purposes only and are not intended as legal advice.

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