In a Chapter 7 bankruptcy, you are free of all debts except for tax payments and other necessary payouts like child support. Your secured loans are also removed from you in the sense that they have some kind of backing in the form of property, so personal liability is removed. Lenders are not free to sue you personally for any debts that you owe them after a Chapter 7. Unsecured loans are mostly wiped out. In essence, you are given a clean slate. If you, however, wish to hold on to your property like a house or car, there is a chance to do it via reaffirmation agreements.
Reaffirmation agreements come to play when you are willing to pay for the property or the secured loan for which your property can be taken and sold. Essentially, you are willing to take the lien of the property back on yourself. If you have the money to pay for the property like a house which is securing a loan, you can outright pay for it and buy it back. If you are unable to make this payment, as is the case with a majority, you can go in for the next option.
When redemption doesn’t work, reaffirmation might. By signing an agreement with your lender, you can promise to continue paying for the property even after the bankruptcy comes through. So, you will be left with the property and the lender will get their monthly payments.
The whole idea of chapter 7 is to get out of debt, then why will anyone do this? Some people cannot manage their finances and are forced to get into a Chapter 7, but that also does not mean they can make do without all of their current assets. In most cases, reaffirmation agreements are made on cars so that people can continue to go to work at least.
Fighting to keep your secured assets isn’t easy. Using the guidance of an experienced Houston bankruptcy attorney is important. We can help you make an educated decision and plan for debt relief.