Why You Might Want to Reaffirm Debts

If the debt is attached to an asset you want to keep (i.e., your car or house or business), you may want to keep it. This will also help you rebuild your credit after the discharge. If the debt is for a service you want to continue receiving (i.e., your child's orthodontist, family doctor, etc.), you might want to keep it.


Why You Wouldn't Want to Reaffirm Debts

Reaffirmation means that the your personal liability for that debt will not be discharged in the bankruptcy. If you can't keep up with the payments, the creditor can repossess or seek and obtain a judgment against you. Since you just filed bankruptcy, your options are pretty slim for the next few years. You could, however, file Chapter 13 when that option becomes available. Also, reaffirming a credit card doesn't mean that the creditor has to keep the credit line open after your discharge. Most will cancel the card and you're still on the hook for the debt and are not rebuilding your credit.


If You Want to Reaffirm Debts: Next Steps

If you decide to reaffirm a debt, you must do so before the discharge is entered. You must sign a written reaffirmation agreement and file it with the court. Most courts have a form available online. If you have no attorney or the court does not approve the reaffirmation, a reaffirmation hearing will be held.


The Hearing: What to Wear

Don't panic. Actually, a little panic is okay. People who don't show respect to the court by their behavior or dress may not like what the judge has to say, if they even get in to see the judge. That being said, the hearings are very informal. I always advise litigants to dress up whenever going to court to show respect for the judge. If you don't have a suit and tie or a skirt suit or super-nice dress, don't worry, don't run out to buy one and certainly don't borrow a friend's outfit. Just wear something nice to court. For guys, a polo shirt and khakis is good. For women, you have a vast array of options and my only advice to you is to keep the hemlines closer to the knee than the belt and the necklines closer to your neck than your belt. Just wear something clean that doesn't look like it was wadded up in the corner. Guys...don't wear shorts!!!


At The Hearing

The judge is going to ask you some questions. The creditor will likely be there, too, probably on the phone. The judge wants to determine if keeping this debt really is in your best interest. Most people are reaffirming car loans so here is what to expect for that circumstance. 1. When did you buy it? 2. If it was recent, why did you buy it? 3. Why do you need it? 4. What is the value of the car? (Be prepared and come with a printout from kbb.com) 5. How much is owed on the car? 6. What are the payments? 7. What is your income (monthly)? 8. Looking at the expenses you indicated on your schedule, is this car affordable? 9. How long have you been at your present job? 10. Are you aware of the consequences that may occur if you default on this loan after the bankruptcy discharge? After you've answered all those questions, the judge is likely to allow the reaffirmation.