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Is There A Benefit To Reaffirming A Debt?

If you have less money than you do bills, you might be thinking about filing for bankruptcy to alleviate your financial pressure. Among some of the decisions you will have to make, such as when to file and what type of case to file, you will need to decide what debts to reaffirm. Reaffirming a debt is like signing a new contract for the obligation, and you will be responsible for repayment of anything you reaffirm even after your bankruptcy case comes to an end. Making a choice to obligate yourself financially to paying certain things seems counter productive to the goals of bankruptcy, but can be helpful depending on your particular circumstances.

Some of the benefits to reaffirming a debt in bankruptcy are:

• You might be able to get the lender to negotiate the repayment terms, such as by lowering the interest rate as part of the reaffirmation agreement. Because the reaffirmation agreement becomes the new loan, the terms in the reaffirmation govern. If your lender agrees to lower the rate to incentivize you to sign the agreement, your payments could be less.
• You will be able to communicate with your lender after bankruptcy. A reaffirmed debt is not discharged, and thus the lender is still allowed to talk to you about your loan without violating the bankruptcy discharge order. This can come in handy if you fall behind on payments and need your lender to extend a grace period or make other concessions.
• If you need a new loan after your bankruptcy case is over, a lender with whom you have reaffirmed a debt is more likely to work with you than a lender you have not continued to pay.

We understand the need to get things right when you file bankruptcy, so you can get back on your feet financially. Deciding to continue making payments for debts when you are experiencing financial hardship is difficult, but we can help you make the right choice.

For more information about how to handle overwhelming debt and how a reaffirmation agreement can benefit you, contact us at We will help by coming up with solutions that work for you.

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