Minnesota Bankruptcy Reaffirmation Agreement: What it is and Why You Need It
If you`re considering filing for bankruptcy in Minnesota, you might come across a term called “reaffirmation agreement.” This legal document allows you to keep a secured debt (such as a car loan or a mortgage) even after your bankruptcy discharge.
In this article, we`ll discuss what a reaffirmation agreement is, how it works in Minnesota bankruptcy cases, and why it can be beneficial for you.
What is a Minnesota Bankruptcy Reaffirmation Agreement?
A reaffirmation agreement is a legally binding contract between you and a creditor that allows you to retain ownership of a secured asset (such as a car, a house, or furniture) even after your bankruptcy discharge. In a reaffirmation agreement, you agree to continue making payments on the debt as if you had never filed for bankruptcy.
Why do I Need a Reaffirmation Agreement?
If you`re filing for Chapter 7 bankruptcy in Minnesota and you have secured debts, such as a car loan or a mortgage, you may want to keep your property. In that case, you`ll need to sign a reaffirmation agreement to keep your secured debt.
However, it`s important to note that reaffirming a debt can have long-term consequences. If you default on your payments after bankruptcy, the creditor can repossess your property and sue you for the remaining balance. So, before signing a reaffirmation agreement, make sure you can afford to keep up with the payments.
How does a Reaffirmation Agreement Work in Minnesota?
In Minnesota bankruptcy cases, a reaffirmation agreement must be filed with the court. The agreement must be signed by both you and the creditor, and it must include:
– The amount of debt being reaffirmed
– The interest rate and payment terms
– The property being reaffirmed
– An explanation that you have been advised by an attorney about the legal consequences of reaffirming the debt
Once the agreement is filed with the court, a judge will review it to determine whether it is in your best interest. If the judge approves the agreement, you`ll be able to keep your property as long as you continue to make your payments.
It`s important to note that you have the right to revoke a reaffirmation agreement within 60 days after it is filed with the court. If you`re unsure whether reaffirming a debt is the right choice for you, talk to a bankruptcy attorney who can help you make an informed decision.
Conclusion
In conclusion, a Minnesota bankruptcy reaffirmation agreement can be a useful tool for keeping secured debts after bankruptcy. It allows you to retain ownership of the property while continuing to make payments on the debt. However, it`s important to carefully consider the long-term consequences of reaffirming a debt before signing an agreement. If you`re unsure about whether reaffirmation is the right choice for you, consult with an experienced bankruptcy attorney.