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Can I Back Out Of A Reaffirmation Agreement?

When you file for bankruptcy, one way to keep property is to reaffirm the debt. A reaffirmation agreement is required, and it is essentially a new contract for the debt. Most lenders want you to reaffirm, because it means the loan is still due even after the bankruptcy case is finished. The consequence is that if you fail to make payments pursuant to the reaffirmation agreement, the lender can not only repossess the collateral but can also sue you for the money due. This harsh reality leads many bankruptcy filers to have second thoughts about reaffirming a debt, even after the agreement has been signed.

If you are among this group of people, who are reconsidering the decision to have reaffirmed, there is a remedy. A reaffirmation agreement can be rescinded, which requires taking the following steps within your bankruptcy case:

  • Giving notice to the lender that you intend to rescind the agreement.
  • Notice must be pursuant to any time frame set forth in the agreement itself, or sixty days after the agreement has been filed (whichever of these dates occurs last).

The effect of rescinding a reaffirmation agreement is that the debt is no longer due after the bankruptcy case is completed. However, if you wish to keep the collateral that was the subject of the agreement, you will still have to make voluntary payments. If you miss a payment, the creditor has the right to repossess the collateral, or in the case of real estate has the right to foreclose. The decision is yours, and you have to do what makes sense for you and your budget. It is also important to consider your long term financial goals when deciding to reaffirm a debt, or to rescind an agreement to reaffirm. Our goal is to help you identify factors that will enable you to make a decision that works best for you. Call our office today for more information about bankruptcy, and how it can help you. We will listen to the particulars of your situation, and offer advice on your options so you can make an informed decision.

For more information about bankruptcy, contact us at We will help by coming up with solutions that work for you.

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