In an earlier blog, we talked about reaffirming your mortgage and why it is not a good idea. Here we will talk about reaffirming your vehicle (or your mobile home if it is not attached to land). If you will remember, according to SC bankruptcy law, reaffirmation agreements only apply to personal property and not real estate and only happen in Chapter 7 (not 13s). Does that mean that you will have to reaffirm if you file a Chapter 7? Honestly there is no easy answer to this question.
The first thing we do want to mention is that bankruptcy discharges your personal liability for a debt. But it does not remove secured loans from vehicles or homes. This means that if you wish to keep your property you have to continue to pay. Under the current bankruptcy law, you have three options in terms of your secured property; Surrender, Redeem (payoff the value), or Reaffirm. If you choose one of these options, this blog won’t help. Surrendering means that you will not have the property anymore and redeeming means that you will have a paid off vehicle. What about the third option?
One of the great things about bankruptcy is that if you choose or need to get rid of your secured property after you file, even years after discharge, you can do so without owing a deficiency. Signing a reaffirmation negates this protection. It is just as if you are signing a new loan—and since it is signed after you file, you cannot discharge it in bankruptcy. It may be that you get the same terms or sometimes even better terms, but if that car or truck breaks down or gets in an accident, then you are still stuck with any deficiency.
Contact Lam Law Firm Today
Come speak with our experienced bankruptcy attorney, Huong Lam, and let her put your mind at ease about the process. Lam Law Firm is here to help! Call us at 843-839-9995 or fill out our contact form online to set up your initial bankruptcy consultation.
