Dallas Bankruptcy - Reaffirming Debt

When you file for a Chapter 7 bankruptcy, all of your contracts and debt are voided out. 

It’s that powerful. 

It will wipe out your financial responsibilities for everything.  But there are some types of debt that you may want to keep, for example, your car or your home. 

Let’s say that you have found yourself filing for a Chapter 7 bankruptcy because you can’t afford all your credit card bills and now you’re behind on everything that you owe.   You’ve got a good car though that you found at a great price.  After completing a Chapter 7 filing, if you miss one payment or are already behind on your car, the creditor isn’t going to help you out one bit.  You car will likely get repossessed. 

However, with all your debt wiped clean, you can now afford to make all your future payments.  In this case, you should reaffirm that debt.  This would mean that you would sign a reaffirmation agreement prepared by your creditors and file it with the court. 

What this does is revive the terms of your car note.  This same situation can also be applied to keeping your house.

 A reaffirmation of debt can only occur under a Chapter 7 bankruptcy filing.  There is no process to reaffirm debt under a Chapter 13, since your debt is not wiped out the way it is in a Chapter 7 bankruptcy.