Can I Keep My Car and House?Comments Off on Can I Keep My Car and House?

Can I Keep My Car and House?

You can choose to pay for any pre-petition debt that you choose, provided that you signed a “reaffirmation agreement”, you have enough money in your budget to afford a payment, the creditor still wants to do business with you, and the court approves the reaffirmation agreement. If you don’t have enough money in your budget, there is a presumption that the payment is an undue hardship to you and the court will not allow you to keep the debt and property. Also, it is up to the creditor’s discretion whether or not they choose to issue a reaffirmation agreement.

If you want to reaffirm on a secured debt (a debt with collateral), you must keep making payments on the debt during bankruptcy. If you want to keep your stuff, you must pay for it. If you decide you want to reaffirm on a car, for example, and sign a statement that you intend to keep that car, you must sign a reaffirmation agreement within 60 days from the meeting of creditors or the automatic stay will be lifted automatically and the creditor can come get the vehicle.

**Please note some creditors will not send a reaffirmation agreement unless the account is current.

You do not have to reaffirm on any debt. Many creditors let you continue to keep the collateral as long as you continue to make your monthly payments. The advantage to you for NOT filing a reaffirmation agreement is that you can surrender your collateral (home or car) at any time after the bankruptcy without consequence. If you lose a job, or just decide you cannot afford the house any more, you can walk away and the mortgage company cannot sue you for the balance. The disadvantage is that 1) the creditor may decide to declare your loan in default and repossess the collateral (although it rarely happens) 2) your future post-bankruptcy payments will not be reported to the credit bureau, and the payments will not be used to rebuild your credit, and 3) you may not be able to participate in future governmental or private incentives or programs, like loan modifications or deferments should you fall behind in the future. This is a very important decision for you to make before you sign the reaffirmation agreement.