What is a reaffirmation agreement and how does it work in Chapter 7 Bankruptcy?

A reaffirmation agreement is a legally binding document that allows a person to keep a specific item of property, even if it would normally be sold off as part of the bankruptcy process. In California, a reaffirmation agreement typically applies to a secured loan, such as a vehicle or home. When filing for Chapter 7 bankruptcy, a debtor is allowed to keep certain items that are exempt from the bankruptcy process, as long as they can maintain the required payments. When filing for Chapter 7 bankruptcy, the debtor has the option of negotiating a reaffirmation agreement with the creditor of one of the items. This document allows the debtor to keep the item, even though it would normally be sold off as part of the bankruptcy process. The agreement must be approved by the court before it is binding, and it is usually beneficial for both the debtor and the creditor. The debtor gets to keep the secured item, and the creditor gets a guarantee that they will receive their payments as long as they stay current on the agreement. In order to successfully file a reaffirmation agreement, the debtor must demonstrate that they have the ability to make the payments required by the agreement. The reaffirmation agreement is an important tool available to debtors filing for Chapter 7 bankruptcy in California. By entering into a reaffirmation agreement, a debtor can keep certain secured items that would otherwise be sold off as part of the bankruptcy process. This can help the debtor rebuild their credit, as they will be able to keep their payments current as required by the agreement.

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What is a reaffirmation agreement and how does it work in Chapter 7 Bankruptcy?

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