In a bankruptcy filing, you have a say in what you’d like to do with the debts you’ve listed in your filing. You must list all your debts, since the trustee needs to get an accurate picture of your financial obligations in order to do his or her job properly.
You must list all your debts in bankruptcy, but you can indicate what you would like to happen from there. Your options include surrendering the asset, keeping the asset and continuing to pay for it, or a compromise that you come up with that the creditor can agree to or not.
If you agree to keep a secured asset and continue paying for it, that’s called a reaffirmation agreement. The catch is that if you reaffirm a secured debt like a home or a car, you give up your right to ever waive your liability for that debt, even if you end up in bankruptcy again. You can never walk away from that asset or the debt as long as you carry it. In the case of a car, that would mean if you quit making payments after bankruptcy, the creditor could repossess the car and you would be required to continue making payments.
Reaffirmation is required in you want to keep the debt. If you think there is any chance you would default in the future, then signing a reaffirmation agreement is a bad idea. But, you can’t have it both ways. You can’t keep the secured item AND discharge the secured debt. If you want to keep the secured item, you have to keep paying and reaffirm the debt. Therefore, you keep the risk of future default and if you fail to pay, you can be sued for the full amount of the debt even after you obtain a discharge of your other debts through the bankruptcy case.
The decision to file bankruptcy is an important decision. Likewise, the decisions you make during your bankruptcy case are just as important and should be made with the assistance of an experienced bankruptcy lawyer.
Over the past 30 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
About the Author
Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More