Chapter 7 New Jersey Reaffirmation Hearing

If you are deciding whether to file for bankruptcy under Chapter 7 or Chapter 13 in New Jersey, a key element of that evaluation is often whether you wish to keep secured assets. These assets are the ones that are put up as collateral for the related loans, such as a boat or car. In Chapter 7 (as well as Chapter 13) bankruptcy, you may be able to keep these important assets by signing a reaffirmation agreement.

The Chapter 7 New Jersey reaffirmation hearing in personal bankruptcy cases is one component of the process to determine whether you are able to keep these valuable assets. A seasoned Chapter 7 bankruptcy attorney could explain these hearings and help you determine whether you may be eligible to keep certain assets.

Reaffirmation Hearing

To reaffirm the ability and desire to continue paying down debt associated with secured assets so that those assets are not repossessed and sold to satisfy the debt, a person must generally obtain court approval of the reaffirmation agreement they entered with the creditor in a Chapter 7 New Jersey reaffirmation hearing.

This is because the terms of the loan may be renegotiated in arriving at a reaffirmation agreement that the creditor is willing to sign and key terms such as the following may be impacted:

  • The amount of the loan to be repaid
  • The amount of each installment payment and the time for making payments
  • The interest rate that will be charged on the loan

Because debts covered by a reaffirmation agreement cannot be the subject of a bankruptcy proceeding for the eight years following execution of the agreement, it is important that the debtor be able to make the payments specified in that agreement. In other words, if it is likely that the debtor will be unable to make the required payments, there is no second chance for a reaffirmation in a subsequent bankruptcy—the creditor will simply be entitled to repossess the asset.

The Chapter 7 reaffirmation hearing in personal bankruptcy cases is typically required if someone has not been represented by an attorney throughout the process of negotiating the reaffirmation agreement. This is to ensure that the agreement is in the best interests of a person.

What Happens at the Hearing?

The debtor must attend the Chapter 7 New Jersey reaffirmation hearing in personal bankruptcy cases. At the hearing, the judge will typically ask questions to ensure they understand the terms of the agreement. The judge may also ask how the debtor intends to make the payments required under the agreement, including questions regarding:

  • Any changes in income or expense levels since the debtor filed for bankruptcy
  • Assistance the debtor may receive from friends or family
  • The debtor’s perception of the asset value

The judge will approve or deny the reaffirmation agreement based on the information provided during the reaffirmation hearing. Typical reasons why a judge may not approve the agreement include the agreement calls for an unreasonably high-interest rate, the debtor is unable to make payments based on income and expenses, or the total amount of the loan to be repaid exceeds the value of the asset.

How a Chapter 7 New Jersey Bankruptcy Attorney Could Help

Even if the judge does not approve the reaffirmation agreement during the hearing, it may still be possible for you to keep the asset in some circumstances if you continue making payments under the pre-existing loan, assuming it has been brought current.

A lawyer could explain Chapter 7 New Jersey reaffirmation hearing if you are considering trying to keep assets while filing for bankruptcy. Call today to set up a free consultation.