In most cases, borrowers file for bankruptcy because of their ability to discharge their debts. A bankruptcy discharge is a permanent court order releasing the borrower from the responsibility of having to pay the debt, and prohibits the creditor from taking any collection action against the borrower.
However, in some cases a borrower may want to reaffirm a debt in bankruptcy, rather than discharge it. A Florida borrower will usually choose debt reaffirmation when the debt has collateral the borrower wants to keep, such as a car or valuable jewelry. When there is debt is reaffirmation in Florida, the borrower voluntarily agrees to pay the creditor all or a portion of the money owed. If a debt is reaffirmed and the borrower fails to pay the debt, the creditor can seek repossession and other legal actions to collect the debt.
Requirements for Reaffirmation:
Debt reaffirmation agreements are completely voluntary in Florida, meaning a borrower in bankruptcy can never be compelled to reaffirm a debt. In addition, all reaffirmation agreements must be approved by the bankruptcy court before they can become effective.
A court will only approve reaffirmation agreements if:
- It is in the best interest of the borrower
- It is entered into voluntarily
- The borrower has the ability to repay the debt
- The creditor gives something of value in return for the borrower signing the reaffirmation agreement
How To Keep Your Property Without Reaffirmation:
Reaffirmation is a good tool for borrowers, but only if it is used in appropriate situations. If the property you want to keep qualifies for a bankruptcy exemption, in some cases it may not be a good idea to reaffirm the debt. If the property is exempt the borrower will be allowed to keep the asset without having to reaffirm the debt. Which type of property and the amount that is eligible for an exemption will be determined by both Federal bankruptcy law and Florida Bankruptcy law.
If you have questions about the type of property and amount that can be exempted in bankruptcy, contact us to speak with a Tampa bankruptcy lawyer. Most exemption questions can be answered over the phone. For more in-depth questions we offer free in-person consultations for borrowers considering filing for bankruptcy. You can also obtain valuable information on debt reaffirmation in by viewing the Reaffirmation Guide published by the Florida Bar Association.
Consult a Bankruptcy Lawyer in the Tampa Bay Area Today
If you are having a difficult time meeting your financial obligations, Florida Law Advisers, P.A., may be able to help. Our Tampa bankruptcy attorneys have years of experience helping people just like you solve their financial problems. We understand these are very difficult times for you and we are here to help. We have many options available that can help you successfully manage your debt and regain your financial health.
In some cases filing for bankruptcy may be a good solution; however, it is often not the only solution available. The right course of action will depend on the unique circumstances of your case. Contact us today to schedule a free, confidential consultation with a Tampa bankruptcy lawyer to see what options may be available to you. During the consultation an experienced Tampa Bankruptcy attorney will carefully review the facts of your case and help you choose a course of action that is best for your specific needs.
Frequently Asked Questions
Reaffirmation of debt is an agreement between the debtor and creditor to pay back a loan. Often, a debtor will request to reaffirm a debt if they want to maintain possession of property that is used as collateral. If the debtor reaffirms the loan and makes no future defaults, the creditor will be unable to repossess the property.
No, if the collateral qualifies as exempt property you may not have to reaffirm the loan. Exempt property are assets that you do not have to forfeit when filing for bankruptcy.
Yes, you may be able to affirm debts in both Chapter 7 and 13 bankruptcy. However, it is most common to affirm debt in Chapter 7.
Yes, reaffirmation agreements must be approved by the bankruptcy court before they can become effective. Generally, the court will require an agreement to be in the best interest of the borrower.