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Want to keep an asset after bankruptcy? Reaffirmation may work

On Behalf of | Jun 10, 2020 | Bankruptcy |

It’s not uncommon for the average person to fall on hard economic times at some point in their life. They might lose their job, suffer a serious injury, develop a severe illness, dissolve their marriage, or simply struggle to make enough money to get by. For many people, the answer to their economic woes is to seek out loans, take on more hours, or secure a second job. The sad truth of the matter, though, is that many of these people end up wasting years, if not decades, trying to crawl out of debt only to find themselves falling deeper into the hole.

Fortunately, bankruptcy is a very real debt relief option, but many individuals think that pursuing personal bankruptcy will leave them with nothing. This is utterly false. As we’ll discuss in a future post, there are a number of bankruptcy exemptions that allow you to keep some property, including furnishings, clothing, and personal property up to a certain amount. If there’s another asset that you want to keep that falls outside of the bankruptcy exemption, or if you want to ensure that you can keep your vehicle or another more expensive piece of property, then you might want to consider a reaffirmation agreement.

A reaffirmation agreement is a contract whereby you agree to repay the outstanding debt balance while retaining the asset. This means that you agree to take the asset out of the bankruptcy process, which may have otherwise required you to sell the asset off. Many people find reaffirmation agreements beneficial because they can still free themselves of other debt through bankruptcy, keep the assets that are important to them, and be capable to getting up to date and staying current on that outstanding debt. You might even be able to negotiate a lower interest rate.

Bankruptcy is a process that has to be carefully navigated in order to achieve a desirable outcome, though. This is why many individuals choose to seek assistance from a legal professional who is experienced in this area of the law. So, with that in mind, don’t let your debt burden overwhelm you unnecessarily. Instead, think of the steps you can take to obtain the fresh financial start you deserve.