Do-It-Yourself Bankruptcy: Is Reaffirmation in Your Best Interest?

Do-It-Yourself Bankruptcy: Is Reaffirmation in Your Best Interest? "Affirmation is a part of the bankruptcy process, and if you opt for Do-It-Yourself Bankruptcy, you may question whether reaffirming your debt is in your best interests. In some cases, this step is taken so that the debtor can retain certain property, such as a house or vehicle, but creditors frequently attempt to obtain reaffirmation even when this is not the case. When you reaffirm a debt, you consent to be held liable, and the debt will not be discharged in your bankruptcy case. If you fail to make the agreed-upon payments, the creditor may pursue all permitted collection actions, and bankruptcy protection does not apply to reaffirmed debts.Even if you opt for Do-It-Yourself bankruptcy, you should never reaffirm a debt without first seeking legal counsel to ensure that doing so is both necessary and protects your interests. Some individuals believe that leaving their oldest accounts open during reaffirmation will help defend their credit score, but this is not the case and is typically a mistake. When you seek bankruptcy relief, your credit rating will be affected the same regardless of whether you reaffirm any debts or not, and reaffirming debt makes your bankruptcy much less effective because you will continue to owe debts after your bankruptcy has been discharged.In certain situations, it may be in your best interest to reaffirm your debt if you intend to continue making payments on the debt. If you have a vehicle loan and desire to keep the vehicle, you can sometimes choose to reaffirm, and the same is true for a home mortgage. Reaffirming secured debt may be prudent if you do not wish to lose the property that serves as collateral for the debt. In a Do-It-Yourself Bankruptcy, you will be able to retain property through reaffirmation if you wish to do so. Typically, the creditor will send you the forms to complete, and you will submit them back to the creditor, who will then file them with the court. A seasoned attorney may (or may not) be able to negotiate with the creditor on your behalf to obtain significantly more favorable terms in the reaffirmation agreement.On occasion, reaffirmation may be in your best interests, but on other occasions, it could be detrimental to your financial security and fresh start after bankruptcy. DIY Bankruptcy should only be used in extremely simple situations, and even then, it is not the best option for most people. Without the assistance of legal counsel, reaffirmation could be costly, and it may not be possible to determine if the reaffirmation contract is in your best interests. If you are uncertain, you should discuss your concerns with a bankruptcy attorney to ensure that you make the best decision for your specific case.
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