Protect Your Possessions During NJ Bankruptcy
Bankruptcy Lawyers in NJ Explain Options
If you are in debt and are considering your options going forward, you likely want to find a way keep your possessions – home, car, furniture, etc. If the property can’t be protected through federal or state bankruptcy exemptions, then you will probably need to enter into an agreement with the creditor to keep the possessions.
A reaffirmation agreement may be your best option. Chapter 13 will allow you to keep the property through a properly approved five-year bankruptcy reorganization plan. Chapter 7 protects your property through what’s called a reaffirmation agreement.
At Garland & Mason, L.L.C., our bankruptcy lawyers in NJ have years of experience handling reaffirmation agreements in Middlesex County and throughout New Jersey. We can help you understand your options and alternatives, which documents you need for the agreement, what you need from the creditor, how the court approves the agreement and what happens if the agreement fails. We’ll explain the bankruptcy process.
What is a Reaffirmation Agreement?
A reaffirmation agreement is a voluntary program between a creditor and the person who owes the money and is behind on payments.
- It’s voluntary. The debtor is not required, and can’t be forced, to enter into a reaffirmation agreement.
- It assumes debt that would have been otherwise discharged.
- It applies to debts where the creditor has a security interest – the right to repossess on default. Typical security interests are a home mortgage or a car loan.
There are Pros and Cons with Reaffirmation Agreements
On the positive side, you get to keep the property. You might be able to bargain for better terms than the original agreement or for a lump sum payment. On the other hand, a reaffirmation agreement may not be the best choice for you. Consider that:
- It may affect your credit score negatively
- Both parties must agree to it before the bankruptcy discharge date
- Once your bankruptcy is over, you’re subject to the terms of the agreement. If you can’t meet the terms, the creditor can try to collect the balance due.
- It might be better to save until you can really afford the payments.
The Role of the Bankruptcy Court in the Reaffirmation Process
There is a hearing and the bankruptcy judge must approve your reaffirmation. There are a lot of forms that you must prepare in addition to the formal agreement. These include disclosure statements, certifications, court motions and more. After meeting with bankruptcy lawyers in NJ, you will better understand your rights during the process.
Other Things to Know about Reaffirmation Agreements
Some lenders may not require an affirmation agreement and may still let the debtor continue paying and continue possession – especially if their credit is relatively good.
Debtors are entitled to federal and/or New Jersey bankruptcy exemptions. The exemptions may be large enough that you don’t need the reaffirmation agreement. You have a right to rescind the reaffirmation agreement within certain timelines.
Count on Garland & Mason, L.L.C. to Help You Keep Your Possessions
Do you want to keep your house, your car and other assets even though you have fallen behind on payments? Then contact Garland & Mason, L.L.C. today to start your journey toward financial freedom. We offer a free initial consultation with an experienced bankruptcy attorney in NJ. Call (732) 358-2028 or fill out our simple contact form. Our office is handicap-accessible. It is conveniently located just 15 minutes from the New Jersey Turnpike and the Garden State Parkway. Parking is free.