Debt Reaffirmation
Have you recently filed a bankruptcy petition under Chapter 7 of the Bankruptcy Code, or are you considering the possibility? If so, there is some very important information you should know.
In Chapter 7 cases, the United States Trustee's Office or a private individual appointed by the United States Trustee (the trustee) has the responsibility to administer your bankruptcy estate, which consists of almost all of your property as of the date of the bankruptcy filing. The trustee is required to identify, collect and sell all of your assets owned at the time the petition was filed, except any that might be considered exempt (some personal items, maybe an automobile and possibly some real estate). The money received from the sale of your assets will be distributed among your creditors.
After filing the bankruptcy petition, you may want to repay a particular debt, such as an automobile to transport you to your place of employment, or you may be asked by a creditor to pay a debt. If you decide that you want to pay any specific debt(s) that otherwise would be discharged in the bankruptcy, you must sign a reaffirmation agreement (a legally enforceable document promising to pay all or a portion of the debt) and file it with the court.
Reaffirmation agreements are strictly voluntary, must not impose an undue burden upon you or your family, and must be in your best interest. Remember, just because a creditor asks you to reaffirm, or reobligate yourself to pay a debt, you are not obligated to do so.
Recently, some retail merchants and credit-card issuers have solicited customers who filed a Chapter 7 bankruptcy petition to sign a contract agreeing to repay their debt rather than have it discharged by the court. Although customers did sign reaffirmation agreements, they were not properly filed with the bankruptcy court. Nonetheless, the companies illegally attempted to collect on the reaffirmation agreements. Such activity by a creditor is a violation of bankruptcy law.
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