Reaffirmation agreement(s)
Frequently, bankruptcy debtors find themselves in the position of spending more than the amount of their earnings. Such situations are not unusual in a Chapter 7 liquidation case and are in fact the reason the debtor must file bankruptcy, because they cannot afford a repayment plan for the amount they owe. However, even in these no-asset cases debtors often purchase property with financing but wish to retain the collateral securing their debt. These debtors would be allowed to file for bankruptcy relief and receive a discharge of unsecured debt while reaffirming the secured loans. Reaffirmation agreements for these debts would usually be allowed by the bankruptcy court but cases of debtors whose expenses exceed their income receive special scrutiny. The court might hold a hearing and wish to hear from the debtor that in fact they are prepared to make continued payments in spite of the “presumption of undue hardship.”
Disclaimer: This does not constitute legal advice. Please contact a bankruptcy attorney in your jurisdiction for question specific to your situation.
