Reaffirming Secured Debt In Bankruptcy

Bankruptcy law allows people to keep a great deal of their property through the use of exemptions. However, some items might not fit within any exemptions or will be subject to repossession for other reasons. Fortunately, an experienced attorney may be there to help you keep your car and other property by reaffirming the debt, if doing so is in your best interest.

At Minion & Sherman, our attorneys have more than 40 years of combined experience helping people find relief from overwhelming debt in northern New Jersey. We understand how financial problems can take over your entire life, and we are devoted to helping you confront the situation and take back control of your finances. To arrange a free consultation with our experienced Essex County bankruptcy lawyers, please call 973-559-5791 or toll free 866-915-1839. You can also contact our law firm online. Evening and weekend appointments available.

What Does It Mean to "Reaffirm Secured Debt" in Bankruptcy?

Debt reaffirmation happens most often in a Chapter 7 bankruptcy. To put it simply, when you file for bankruptcy, contracts between you and your secured creditors are broken. Then, we can ask the bankruptcy court to remove certain items from the bankruptcy estate, promising that you will pay the debt rather than have the item sold or repossessed.

In New Jersey, it is not possible to reaffirm real estate or mortgage debt. However, there are many items that are eligible for debt reaffirmation, such as:

  • Cars
  • Furniture
  • Appliances
  • Recreational vehicles like boats or motorcycles

Debt is usually reaffirmed under the terms of the original contract. Before allowing reaffirmation, the court will analyze your finances and the value of the item. If reaffirmation is allowed, you have 60 days to change your mind. After that, you are obligated to pay the debt. If you do not, the item can be repossessed.

A Note on Store Credit Cards

If you have a credit card with any major department store or retailer, the contract you signed with them gives the company a security interest in the items you buy using that credit card. Technically, the stores have a right to take the items back after your bankruptcy is over. The store may request that you reaffirm the debt in order to avoid the repossession. In our experience, those stores rarely, if ever, take any action to get items back from consumers. We can advise you on the appropriate way to handle this type of issue.

Contact Our Lawyers for a Free Consultation

We welcome the opportunity to speak with you about your financial situation and what we can do to help you avoid repossessions. For a free consultation, call 973-559-5791 or toll free 866-915-1839. You can also contact our law firm online. Evening and weekend appointments available. We serve clients in Essex County, Passaic County, Hudson County, Union County, Somerset County and Morris County.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.