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QR Law Blog
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- Short Sale Approval Letter Review By Attorney
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Reaffirmation Agreements
An individual debtor can choose to keep some personal property by entering into a Reaffirmation Agreement while in Bankruptcy. The Reaffirmation Agreement must be approved by the court. The effect of a Reaffirmation Agreement is that it changes a debt that would be discharged through bankruptcy into a debt that will not be discharged by filing bankruptcy and will remain in effect after the debtor receives a discharge.
Reaffirmation Agreements are not used frequently and there are detailed and specific requirements that need to be complied with. Careful planning and a full understanding of the long term impact of signing a reaffirmation agreement should be adhered to when looking into executing a Reaffirmation Agreement. It is important to seek the advice of a competent bankruptcy professional when looking into a Reaffirmation Agreement.
Reaffirmation Agreements may work well for a debtor if a creditor agrees to give something up in exchange for the Reaffirmation Agreement. Examples of this would be a reduction in the principle balance of a loan or a change in the interest rate and term for a loan. Some creditors may agree to help make payments more affordable when the alternative is to have an asset surrendered in bankruptcy.
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