Should You Sign A Chapter 7 Reaffirmation Agreement

Ferguson & Ferguson

Attorneys at Law

August 17th, 2019

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Do you know if you should sign a Chapter 7 reaffirmation agreement? There are certain times when signing a reaffirmation agreement makes sense. For instance, when a mortgage company agrees to let you reaffirm your mortgage for a lot less money than you owe on it. The problem is that that rarely happens during a Chapter 7 Bankruptcy in Alabama.

What is a reaffirmation agreement? If you are behind on car or mortgage payments in Alabama, and you want to keep the property after filing a Chapter 7 Bankruptcy, you may want to consider signing a reaffirmation agreement. By reaffirming the debt you owe, you are able to keep your house, vehicle or personal property recently purchased, provided you are able to make the payments. The goal in a Chapter 7 Bankruptcy is to get “discharged” from your debt. Discharged means to make the debt go away forever. If you sign a reaffirmation agreement in a Chapter 7 Bankruptcy, you are not getting rid of the debt. You are letting the creditor continue to charge you for something you cannot afford.

If you owe for a car that is worth less than you owe on it, why would you want to reaffirm the debt? It makes no sense to reaffirm a debt where you owe more than its worth. Further, if you owe a lot more on your house than its worth, why would you want to reaffirm the debt? Even though you may have emotional ties to your property, it is probably not a good idea to reaffirm a debt where your upside down.

Everyone needs a vehicle to get them to work, and it may be hard to get one after you file bankruptcy, but reaffirming a debt where you owe a lot more than its worth is rarely a good idea. Sometimes not reaffirming a vehicle or a house you cannot afford is a good idea, even though it is not what you want to do.


Should you reaffirm your debt in your Chapter 7 Bankruptcy? Only you and your attorney can decide if it is in your best interest to reaffirm a debt. Remember that the goal of a Chapter 7 Bankruptcy is to get rid of unsecured debt and secured debts you cannot afford to keep. Often times it is a better decision to not reaffirm your vehicle or mortgage in a Chapter 7 Bankruptcy. When you are ready to file a Chapter 7 Bankruptcy in Decatur or Huntsville, Alabama, call a Huntsville and Decatur Bankruptcy attorney you can trust. We are here to help.