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Three Benefits To Reaffirming A Debt

When you file for bankruptcy you get to make certain choices about what debts you still want to pay. Most people decide to continue making their house and car payments, so they don’t have to move or find another mode of transportation. But when you make this decision, you need to know how you will be expected to continue paying. Prior to the change in bankruptcy laws in 2005 you could simply keep paying certain debts without having to take any other action in your case. But that is not necessarily the case now, and many lenders will require you to sign a reaffirmation agreement for the debt.

A reaffirmation agreement is like a new contract, and signing a new loan while in bankruptcy is scary for many people. But here are three benefits to reaffirming a debt:

• Your lender will still communicate with you, so if you ever need to postpone a payment or ask for a late fee to be removed you will be able to get someone on the line at your bank. This is because a reaffirmed debt is not discharged, so the prohibition on lenders from talking to you about the loan does not apply.
• You may be able to negotiate a lower interest rate for the reaffirmation. This can save you money and it is worth your time to reaffirm if you are going to get a lower rate and payment.
• Your credit will reflect that you have reaffirmed and are paying the loan as agreed. This helps to boost your credit score, which comes in handy after your case is over and you begin working to rebuild and repair your credit.

We understand the decision to file bankruptcy is not one you’ve made lightly, and that the choices you have to make during your case can be hard. It is our job to explain the process, the benefits, and any consequences of decisions you make along the way. For help with bankruptcy and getting out of debt, call our office today. We will discuss the facts of your case with you and give you personalized assistance so you get the most out of your case.

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