Reaffirm Your Debts - Should You Reaffirm Your Debts Before Filing Bankruptcy?

Jun 24, 2022

Before you reaffirm your debts, you need to understand what this method actually does. What are the risks involved? And can you really use it to your benefit? Here are some possible consequences. First, you can't just reaffirm every debt with the same company. Your creditors can repossess your assets if you reaffirm your debts, and they can demand payment of any past-due balances and any deficiency from the sale of your asset.

Second, you may not be able to keep your house. Bankruptcy removes your debt obligations, but you don't have to give up your house. Lenders will still have a lien on your property, so they can still take it if you stop paying. Reaffirming your debts is a great way to keep your home and maintain a current mortgage payment schedule. Reaffirming your debts will also be reported to the credit agencies, which means you can rebuild your credit after bankruptcy.

The best time to reaffirm your debts is before you file for bankruptcy. If you're already behind on your payments, lenders will likely reject your reaffirmation request. Having an attorney prepare the documents for your reaffirmation will help you avoid these pitfalls. Your lawyer will send them to your lenders and inform you of their decision. The lawyer will also let you know if it's a good idea to reaffirm your debts before filing for bankruptcy.

If you've missed a few payments in the past, you can reaffirm your debts and keep your secured assets, including your house or car. Reaffirming your debts can prevent you from filing for bankruptcy for 8 years. The only condition is that you bring all of your accounts up to date, and that you keep up your payments. That means paying 3 months worth of missed payments. But it's not as easy as it sounds.