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Why You Should Consider Debt Reaffirmation

Once you file for Chapter 7 bankruptcy in Georgia, your focus is usually on protecting your assets by hoping that the majority, if not all, of your possessions will be marked exempt from liquidation. Because of Georgia’s liberal exemption laws, our clients often have very minimal property losses, if any at all, but it is always a risk. If there is a particular item that you want to keep, you can file a debt reaffirmation.

A debt reaffirmation must be voluntary, and it must either be filed with the help of a bankruptcy lawyer or approved by the court, which can extremely challenging without the help of a lawyer.

Debt reaffirmation must be voluntary

A debt reaffirmation is only legal if it is completely voluntary. Any creditor who tries to pressure you into signing a debt reaffirmation is breaking the law.

Why do it?

You might be wondering why you would want to pay off a debt that could be discharged through your bankruptcy. A debt reaffirmation allows you to hold onto a certain asset that you want or need to keep, by promising to pay off a part or all of the debt on it. A common example would be a car that you need to get to and from work.

It’s important to note, however, that you are re-assuming the burden of the debt ― whether or not the item becomes damaged before you finish repaying the debt. For example, if you file a debt reaffirmation on your car but it breaks down, you are still responsible for the debt that you have reaffirmed. The only exceptions to this rule are if you cancel the debt reaffirmation within 60 days, or if the cancellation takes place before the court has discharged the original debt.

There are ways to protect your assets even after filing for bankruptcy, but bankruptcy courts are very strict about the proper filing of debt reaffirmations. DebtStoppers, Bankruptcy Law Firm Robert J. Semrad & Assoc., LLC offers a free debt analysis and will work to help you protect as many of your assets as possible.

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