Chapter 7 New Jersey Reaffirmation Agreements

Individuals who are burdened by a heavy debt load may find that declaring bankruptcy under Chapter 7 can provide a much-needed clean slate by erasing all debts. Despite the appeal of this fresh start, it may be difficult to accept losing your home or other important assets in the process.

Chapter 7 New Jersey reaffirmation agreements in the personal bankruptcy context can help you obtain the best of both worlds—wiping the slate clean with respect to unmanageable debts yet allowing you and your family to remain in your home. To learn more about Chapter 7 reaffirmation agreements, speak to a seasoned Chapter 7 personal bankruptcy attorney who could explain the process.

Understanding Reaffirmation Agreements

Generally, to obtain the fresh start benefit of Chapter 7 bankruptcy, the debtor is required to liquidate all assets to satisfy the debts to the extent possible before those debts are erased. However, certain debts including child support, student loans, alimony, and taxes cannot be discharged in bankruptcy. Assets secured by debts such as a mortgage or car loan must also be sold and can result in families losing their homes and other important assets.

If someone has a heavy debt load and are considering Chapter 7 bankruptcy but wishes to keep their secured assets, a reaffirmation agreement may provide a solution. A bankruptcy attorney, experienced in handling Chapter 7 New Jersey reaffirmation agreements in personal bankruptcy cases, could help individuals understand the requirements and consequences of these agreements, including:

  • Back payments – to keep the property covered by the reaffirmation agreement, a person must make any back payments on the loan securing the property
  • Continuing payments – a person must continue to make payments on the debt after signing the reaffirmation agreement
  • Asset selection – someone may select which secured assets they wish to keep under a reaffirmation agreement
  • Future bankruptcies – after executing a reaffirmation agreement, a person is not entitled to attempt to discharge the debts covered under the agreement during the next eight years

The reaffirmation agreement contains information about the debtor and creditor, the amount of debt owed (pre-bankruptcy), the amount of debt to be repaid under the agreement, and interest that will be paid on the debt.

Reaffirmation Agreement Process

The debtor and the relevant creditor must both sign Chapter 7 New Jersey reaffirmation agreements in personal bankruptcy cases. The reaffirmation agreement must be filed with the court and approved by the judge. In determining whether to approve the agreement, the judge will consider whether continuing to pay the debt will impose an undue burden on the debtor.

The reaffirmation agreement is executed before the remaining debt is discharged. It is important to remember that if someone fails to make payments according to the terms agreed upon in the reaffirmation agreement, the creditor can repossess the property securing the loan. Finally, the reaffirmation agreement can be canceled within 60 days after it is filed or at any time before the bankruptcy court discharges the debts.

A Chapter 7 Bankruptcy Lawyer Could Explain New Jersey Reaffirmation Agreements

If you are considering filing for bankruptcy but do not want to accept losing important assets, you may have options. It may make sense to consider Chapter 7 New Jersey reaffirmation agreements.

These agreements can help you keep the secured assets that are important to you while giving you the fresh start a Chapter 7 bankruptcy can offer. To learn more about Chapter 7 reaffirmation agreements, reach out to a practiced bankruptcy attorney who could help determine your path forward.