If you feel overwhelmed with medical expenses and credit card debt, you are not alone. and are struggling to keep up with your monthly mortgage payment, you are not alone. Many Amercians struggle to keep up with their monthly mortgage payment, while juggling other expenses and find it difficult to make ends meet. Bankruptcy allows you to discharge these debts and start over again with a clean financial slate. Chapter 7, otherwise known as liquidation bankruptcy, allows you to part with most of your loan obligations. Yet, there may be items that you do not wish to part with once your bankruptcy is finalized.
Debt reaffirmation allows you to keep certain property and continue to pay on the loan, even after the bankruptcy is approved and other debt is discharged. For example, if you are paying on your auto loan and wish to keep your car once the bankruptcy is over, debt reaffirmation allows you to renegotiate the loan with the lender and continue to make payments. Often times, the bank will work with you by lowering your interest rate or reducing your monthly payments in an attempt to help you keep your loan, and your property. In most cases, it is advantageous for the lender to do this and have you continue making loan payments than declaring bankruptcy on the item.
There may be some items that you do not want to reaffirm. If you are stuck with a hefty monthly payment and you can easily do without the property you are paying for each month, bankruptcy is a good way to finally part with that obligation.
This information is intended to educate and should not be taken as legal advice.