Bankruptcy

Reaffirming A Debt In A Bankruptcy Court

When it comes to reaffirming a debt in a bankruptcy court, there is a set procedure that you need to follow. People usually file for bankruptcy in an attempt to get rid of their debt problems (to avoid the payments on those debts). However, the process requires liquidation of most of their assets except for the ones that are allowed to be exempted. In fact, even those assets where some exemptions are allowed, debtors often fail to keep those assets; they just get the equivalent amount of cash (up to the exemption limit) from the sales proceeds of those assets. For example, if the maximum exemption limit is $500 on a specific property but you have $1500 of equity in it, the bankruptcy trustee appointed by the court for your case will sell of that property and give you only $500 in cash. However, the laws also provide you an option to reaffirm a debt, which means if you agree to continue making the payments on the outstanding debt balance that you still owe on that property, you may be allowed to keep the same (it will not be liquidated). It is however entirely up to the court to decide whether a request for reaffirmation of certain debt should be approved or not.

Hire An Experienced Attorney

Since the bankruptcy laws related to reaffirming a debt in a bankruptcy court can be very complicated, you are advised to consider hiring an attorney to assist you with the process (some people consider it a waste of money and not a wise move when you are already in financial trouble). If you do not want to pay to the lawyer, you will have to handle the process on your own. You will have to make sure that whatever actions you are taking are in full compliance with the laws and court rules applicable in this regard. On the other hand, when you hire a lawyer, he/she will represent you and complete the process on your behalf. As part of the process, you are required to file a certification with the bankruptcy court attesting that there is a valid reason and purpose why you want to reaffirm a specific debt.

Complete The Necessary Forms

There is a set of forms that you need to fill out and submit when it comes to reaffirming a debt in a bankruptcy court. You first need to fill out a few forms to request and confirm a reaffirmation agreement and then a few more forms to file a motion for court approval. The official websites of most of the local bankruptcy courts allow you to download all these forms free of cost.

Before You Submit The Forms

Before you submit the forms to the court, make sure that the information you have provided out there is complete in all respect and that all forms are duly signed by you. Besides that, you are also advised to make a few copies of the forms. Keep one set of the copies to yourself, as you may need he same for future reference. Also, do not forget to include a stamped, self-addressed envelope along with the filing.

Once you file a motion for reaffirming a debt in a bankruptcy court, a hearing date will be given to you. You must attend the court hearing promptly, as this is where the court is going to decide whether your request for reaffirmation of a specific debt should be approved or not.


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