VIDEO: Why You Need a Reaffirmation Agreement in a Chapter 7 Bankruptcy Case
Christy Myatt, attorney with Nexsen Pruet, discusses why you need a reaffirmation agreement in a Chapter 7 Bankruptcy case.
Chapter 7 allows a debtor to discharge certain debts in order to obtain a fresh start. With respect to a secured debt, the individual debtor has 3 options:
- Debtor can surrender the collateral back to the secured creditor. Note that the secured creditor will still need relief from stay to sell the collateral.
- Debtor can retain the collateral and redeem it by paying the value of the collateral in a lump sum and not in installments over time.
- Debtor can retain the collateral and enter into a reaffirmation agreement by agreeing to pay the full amount of the debt over time with interest.