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Reaffirmation agreements can help you keep assets post-bankruptcy

| Jul 6, 2020 | Bankruptcy

It’s fair to say that a significant number of people face financial difficulties at some point in their lives. In some instances that occurs when an individual is younger and simply trying to get established. For a large portion of the others, though, financial struggles can crop up due to the onset of an unexpected medical condition, the sudden loss of a job, a divorce, or even spending that is simply difficult to get under control. Trying to climb out of overwhelming debt and secure financial stability can be completely overwhelming. Sadly, many people waste years, sometimes even decades, trying to fight the good fight to get out of debt.

The truth is that this tactic usually doesn’t work. Most people just end up falling deeper into debt. They probably know that personal bankruptcy can help them elimination many, if not all, of their debts, but they often have misconceptions about the process. Amongst them is that personal bankruptcy, in particular a Chapter 7 bankruptcy, will leave them without anything once everything is said and done. This simply isn’t the case. In fact, state law recognizes a number of bankruptcy exemptions that allow you to keep specified categories of property up to certain value limits.

But even if those assets aren’t enough for you, there are still ways that you can keep certain assets that you need post-bankruptcy but that would otherwise be lost through bankruptcy proceedings. Take your car for example. Although California’s exemptions might allow you to keep several thousands of dollars in equity that you have built up, that might not be enough to allow you to keep your vehicle.

So, instead of losing your vehicle and simply keeping the equity in it, you can choose to enter into a reaffirmation agreement. Here, you simply agree to keep that debt post-bankruptcy and pay it off like you would any other loan. This is oftentimes a viable option because you’ve freed yourself of other debt, which will probably make it easier to repay your car loan.

All of this is to say that there are certain steps that you can take to better ensure that your post-bankruptcy life is started with the stability you need and deserve. If you’d like to learn more about how to navigate this process in a way that suits your needs, then it might be time to talk to a bankruptcy attorney.