When you file a Chapter 7 bankruptcy petition, you must submit a Statement of Intention which indicates if you wish to reaffirm any of your debts. A reaffirmation agreement is a secondary contract where you remain liable on a secured debt, such as a car or mortgage. On the positive side, reaffirming a secured debt will allow you to retain the secured property and sometimes, reaffirming a vehicle could reduce your monthly payments because creditors would rather have a debtor pay a little less than have to repossess and resell the car. On the other hand, reaffirming a debt can be dangerous because if you default on your payments following a bankruptcy, you will now be liable for that debt and the creditor can obtain a judgment against you that cannot be discharged. For more information on this important decision, contact an experienced bankruptcy attorney today.
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