Credit After Bankruptcy – Reaffirmation is a Great Start

One of the biggest concerns that people have about filing bankruptcy is the preoccupation with future credit. Will they be able to get credit? What will the interest rate be if they get credit? How long will it take to be able to buy a home? These are just some of the questions that I hear every day.One great way to keep credit after filing bankruptcy is to enter into a reaffirmation agreement to repay a creditor. A reaffirmation agreement is essentially an agreement providing that the debtor will pay a creditor’s debt even though the debt would otherwise be discharged in a bankruptcy. In theory, the debt can be renegotiated but most reaffirmation agreements simply require the debtor to pay the debt as originally agreed. Most reaffirmation agreements deal with secured debts and are entered into to keep the creditor from repossessing or foreclosing on the property. A valid reaffirmation agreement puts the debtor under a legal obligation to repay the otherwise dischargeable debt. If the debtor defaults on the payments required under the reaffirmation agreement, the creditor retains all the rights they had before the bankruptcy petition was filed.There are some additional requirements concerning reaffirmation agreements. The agreement must be signed by both parties and filed with the court before the debtor receives a discharge from the debt. The court must rule that the agreement does not impose an “undue hardship” on the debtor in order for it to be accepted as valid. Your attorney should be able to guide you through the process smoothly.

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