Secured creditors will defend reaffirmation agreements as “win-win” although it is more a victory for them. In fact, some mortgage lenders refuse to refinance without a reaffirmation agreement. … Reaffirmation agreements confirm a person’s responsibility for paying that burden, even after discharge of other debts.
Can a creditor collect on a discharged debt?
Debt collectors cannot try to collect on debts that were discharged in bankruptcy. … You should also let your attorney know that you have been contacted by a debt collector. Once the debt is discharged by the bankruptcy court, the discharge permanently bars the creditor or debt collector from collection of the debt.
How long do I have to reaffirm a debt?
An executed reaffirmation agree- ment may be filed by any party, including the debtor or a creditor. It must be filed within 60 days after the first date set for the first meeting of creditors in the bankruptcy case unless the deadline is extended by the bankruptcy court.
What happens when a debt is discharged?
A debt discharge occurs when a debtor qualifies through bankruptcy court. When debt is discharged, a lender can no longer make attempts to collect the debt and the debtor is no longer responsible for paying it back. Debt discharge often results in taxable income to the debtor unless certain IRS conditions are met.
How can I legally discharge a debt?
If you want to know how to discharge debt, understand that the most common way people do this is by filing for bankruptcy. Once you discharge your debts this way, it’s permanent. That means creditors can’t legally try to collect from you anymore.
Which debts Cannot be discharged?
Take note of these 8 exceptions before you decide to file Chapter 7 bankruptcy:
- Most back taxes and customs. …
- Child support and alimony. …
- Student loans. …
- Home mortgage and other property liens. …
- Debts from fraud, embezzlement, larceny, or from “willful and reckless acts” …
- Your car loan, if you want to keep your car.
What happens if a reaffirmation agreement is denied?
Either way – if the reaffirmation agreement is not approved, your personal liability is discharged. And – just like when the court denies approval of the reaffirmation – most lenders will simply keep everything the same, as long as you make timely payments and keep the vehicle insured.
What happens if mortgage is not reaffirmed?
If you do not reaffirm the mortgage, your personal liability for paying the debt represented by the promissory note is discharged in your bankruptcy case. … The company can foreclose the mortgage and force a foreclosure sale if you stop making payments.
Can I sell my house if I did not reaffirm?
Since you didn’t sign a reaffirmation agreement on your mortgage, you’re not liable on the debt but the lender still has a lien on the house. … If the mortgage for more than the house is worth, then you can’t sell it unless you get the bank to agree to a short sale.
How do I know if a debt has been discharged?
Since a lot of factors go into determining whether your tax debt was discharged, your best bet is to wait 30-60 days, then contact your local IRS office. By then, their system should have updated throughout and they should be able to tell you which of your tax debts, if any, have been discharged.
How long after meeting of creditors is discharge?
Your creditors have 60 days from the date of your initial meeting of creditors to object to your discharge. If no creditors object and you’ve completed all other requirements (such as filing your certificate of debtor education), then you’ll receive your discharge after the deadline for filing objections passes.
Do I still own my home after Chapter 7?
Chapter 7 Won’t Help You Keep a Home If You’re Behind on the Mortgage. If you are in arrears or facing foreclosure, Chapter 7 doesn’t provide a way for you to catch up. So, unless you can negotiate something with your lender independently from the bankruptcy, you will most likely lose your home.
Can I trade in my car after reaffirmation?
The reaffirmation agreement obliges you to pay the full amount set forth in the reaffirmation document. You can trade in your car if you get enough from it to pay off the reaffirmed debt which is not a frequent occurrence.
Can I modify my mortgage after Chapter 7?
Find out about applying for a modification of your mortgage while in Chapter 7 bankruptcy. … However, if, after you file for Chapter 7 bankruptcy, your lender agrees to a loan modification (often called a workout), there’s nothing in the law stopping you from modifying the loan.
Can I refinance if my mortgage was not reaffirmed?
First of all, there is no legal reason at all why you can’t refinance a loan that was not reaffirmed. … Without an agreement the loan is discharged but the lien remains against the property. As long as you make the payments and stay current you get to keep the home.
What is reaffirmed debt?
When you reaffirm a debt, it means you enter into an agreement with your lender to continue to making payments on the account rather than including it in your bankruptcy.
What does reaffirming your mortgage mean?
Reaffirming your mortgage means that you file paperwork that states that you affirm this debt regardless of your bankruptcy discharge. That protects your lender from losing out on the money they have invested in the property, and it also allows you to retain your ownership in the home and your accumulated equity.
Is a reaffirmation agreement necessary?
Reaffirmation agreements, although required by the bankruptcy laws for every secured debt that the debtor will continue to pay, are often not necessary in practice. This is because the only penalty for failure to sign the reaffirmation is that the creditor might repossess the collateral securing the loan.
Can I keep my car without reaffirming?
You can choose to keep the car and continue paying without reaffirming. You take your chances that the lender will repossess the car, but you also keep the benefits of the bankruptcy discharge.
What happens at a reaffirmation hearing?
At the reaffirmation hearing, the judge will explain any concerns he or she has with the terms of your agreement. In addition, the judge will ask you certain questions to determine whether reaffirming the debt is in your best interest.
Does Chapter 7 wipe Judgements?
If a creditor gets a judgment against you and the debt is dischargeable in a Chapter 7 bankruptcy, filing for bankruptcy will wipe out a creditor’s ability to collect. Judgments, however, can create a lien on your property. … So it’s possible to wipe out a judgment in bankruptcy and remain obligated to pay the lien.
Who determines which debts discharged?
The bankruptcy court has exclusive jurisdiction to determine dischargeability of these debts. If a complaint is not timely filed, the debt is discharged. See §523(c).
What are 5 non dischargeable debts?
Nondischargeable debt is a type of debt that cannot be eliminated through a bankruptcy proceeding. Such debts include, but are not limited to, student loans; most federal, state, and local taxes; money borrowed on a credit card to pay those taxes; and child support and alimony.
Do I have to pay taxes on a discharged debt?
In general, if you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.