Bankruptcy - How to Keep Certain Property and Assets With a Chapter 7 Bankruptcy
This blog is going to discuss the most common question and concern that my clients have regarding filing Chapter 7 bankruptcy: how can I keep my house and my car? Or, put another way, how can I keep my property that I still owe on but is necessary for work and life?
This is by far the most common question and concern that I hear from my clients. The answer to this question will always vary depending upon the circumstances, but in this blog I am going to explain the concept of a “reaffirmation” and how you can implement a reaffirmation agreement to keep your house if you still owe on it or to keep your car if you still owe on it.
If you have read our other bankruptcy blogs on this site, then you will have read that the goal and the purpose of a Chapter 7 bankruptcy is to have certain debts “discharged” and wiped away. If you owe money on your house or your car then that person that you owe the money to (the person who you make the payments to) is a “secured creditor.” In a Chapter 7 bankruptcy, most secured creditors retain the right to seize the secured property even after the bankruptcy discharge has taken place and after the case is completed. However, for an asset that is essential to your life (a house) and essential to your work and mobility (a car), you can exclude that asset or property from discharge, prevent it from being seized, and reaffirm that debt with the secured creditor. Simply put, you can reaffirm that debt with the secured creditor and retain possession of that property by entering into a “reaffirmation agreement” with the secured creditor.
A reaffirmation agreement is a contract entered into between the debtor and a secured creditor whereby the debtor reaffirms that debt obligation, promises to keep making the payments, and the debtor understands that this particular debt will not be discharged in the bankruptcy. That is, the debtor will keep making the same payments for the same amount of time and for the same total amount of the loan as they always have. Your bankruptcy attorney can help to negotiate this reaffirmation agreement with the secured creditor and file it with the court.
One important thing to note is that in order to qualify for a reaffirmation of the debt and a reaffirmation agreement, the debtor generally has to be current on that particular debt. Although that is not always the case, it is a general rule of thumb. Also, you have to be able to show that you can in fact continue to make those payments on the reaffirmed debt after the bankruptcy takes effect.
We can review your specific situation and determine what is the best route to take in order to protect your property and your assets, particularly those assets that you cannot live without. Give us a call to discuss at 870-376-4455, Reeves Law Firm – 500 East Main Street, Batesville, AR 72501. Attorney in Batesville, Arkansas