Here is the letter you will receive from me if a lender sends me a proposed reaffirmation agreement in your bankruptcy case. It discusses the issue of “should I sign a reaffirmation agreement in my bankruptcy case?”  I’m happy to show you a copy of the letter now, because I think it may help clarify a little of the confusion that surrounds reaffirmation agreements in general. When you get this letter from me, it will also have a copy of my “reaffirmation agreement memo” included with it.

Enclosed is a “Reaffirmation Agreement” forwarded to us by ___.  They want you to sign it and send it back to them.

We do not recommend that clients sign Reaffirmation Agreements.  By signing the agreement, you are promising to reinstate the debt you owe.  Of course you plan to keep making your payments for as long as you keep the property they have a lien on, but by signing the agreement you are making yourself responsible by contract to pay them.  This means that if you default later on, you’ll lose the property and still owe the debt.  If you don’t sign the agreement and later give up the property, then you don’t owe them anything else because the rest of the debt will have been discharged in your bankruptcy.

Ask yourself this: “If I am going to sign this contract to pay back the debts that my lawyer and I included in the bankruptcy, then doesn’t that defeat the whole purpose of filing the case?”

The downside is that they may decide to come pick up the property since you didn’t sign their new contract and re-affirm that you’re going to pay the whole loan amount.  Other than Ford Motor Credit, most lenders don’t do that.  But it is a possibility so we want to mention it to you.  If they do end up taking the property back, you can just go get another one.  Your bankruptcy case will get rid of all (or most) of your other debts, so getting another vehicle or whatever should not be much of a problem at that point in the rare instances where the lender tries to take the property.

A final consideration is that a Reaffirmation Agreement requires court approval.  Even if you sign it and send it back, the court may schedule a hearing for you to go try to convince the Judge that you just have to have this particular property and not some replacement.

To sum up:  you can sign this agreement if you would like to, but we do not recommend that you do so.  Our best advice is to ignore it, and just keep making your payments like usual.  We have a handout that describes the process in more detail, and a copy is enclosed.

If you have questions or concerns about this or any other matter, please call.

Sincerely,
Rustin S. Polk

That’s the end of the letter.  You can see the handout about reaffirmation agreements also, if you’d like.

When you’re ready to get out from under the crushing debt load and begin a new debt-free life, contact Dallas bankruptcy lawyer Rustin Polk by clicking here. Tell our Appointments Coordinator, Cindy, that you are a website reader and she will set you up with a free, no obligation appointment to learn how we can help you.