Reaffirming a debt during bankruptcy means that you will continue to make payments on a loan in order to keep the asset. Typically this is done with a home mortgage or car loan. While it is possible to reaffirm debt during a Chapter 7 bankruptcy filing, it is common to retain items and continue to pay secured debt with a Chapter 13 bankruptcy filing.
Since the purpose of filing for bankruptcy in Arizona is to relieve an overwhelming debt burden, reaffirming a debt – keeping a debt – after the bankruptcy filing should be carefully considered. Experienced bankruptcy lawyers at The Frutkin Law Firm, PLC, in Phoenix, Arizona, can help clients determine whether reaffirming debt is in their best interest.
In Chapter 7 bankruptcy a debt can be reaffirmed only if it is deemed to be truly necessary. A typical example would be a car loan for an automobile that is the only viable means of transportation to and from work.
In Chapter 13 bankruptcy a secured debt can be repaid only if the court is shown that the payments can be managed in the overall scheme of the repayment plan. An example would be keeping a home when the mortgage payments can still be made together with the total payment for the Chapter 13 repayment plan.
Reaffirmed debts are not discharged at the end of the bankruptcy filing, and could be subject to collection, repossession or foreclosure if the payments are not kept current. Carefully discuss any reaffirmation decisions with a bankruptcy attorney before you file for bankruptcy in the State of Arizona.
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