Скачать или смотреть Everything You Need To Know About Reaffirmation Of Debts In California Explained By Lawyer Gebelt

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Law Offices of Nicholas Gebelt
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Whittier, CA 90604
(562) 777-9159

Reaffirmation involves reinstating your personal liability for a debt, even after filing for bankruptcy. To break things down in more concrete terms, let’s use a car loan as an example. When you finance a car purchase, the creditor secures a claim against the car. If you don’t make your payments, the creditor can repossess, and if the resale price doesn’t cover what you owe, they can pursue you for the remaining balance.

In bankruptcy, however, your in persona liability can be discharged, meaning you personally owe nothing if the creditor repossesses the car and sells it for less than what’s owed. While the creditor retains a claim against the vehicle, they cannot come after you for any deficiency.

Creditors don’t like this. To address it, the bankruptcy code allows them to require you to reaffirm your personal liability as a condition of keeping the car. Without reaffirmation, the creditor might repossess the vehicle. If you choose not to reaffirm, you can either redeem the car by paying the loan balance in one lump sum or surrender the vehicle.

California law, however, has recently changed. Now, if you are current on your car payments, creditors cannot repossess the car, even if you have discharged your personal liability. This creates a unique tension with bankruptcy law, which permits repossession under non-bankruptcy laws if the debt isn’t reaffirmed or redeemed.

How It Works
Once you file for bankruptcy, creditors cannot contact you directly due to the automatic stay. Instead, they send reaffirmation agreements to your attorney. If you sign the agreement, it’s sent back to the creditor for their signature and then filed with the court.

At this point, a hearing is scheduled. Judges are generally hesitant to approve reaffirmation agreements unless there is an overwhelmingly compelling reason—such as a significant improvement in loan terms. Without court approval, the reaffirmation agreement is void, and there is no personal liability.

Alternatives
If the creditor sends a reaffirmation agreement, your attorney can negotiate more favorable terms. For instance, a recent case involved a title loan with unreasonable terms. By negotiating, the interest rate and monthly payments were significantly reduced, resulting in a mutually beneficial agreement.

Creditors may also agree to a ride and pay arrangement, where you continue making payments without reaffirming the debt. This can be a practical option if the creditor agrees, as it allows you to keep the car without reinstating personal liability.

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