Do You Have to Reaffirm Real Property in a Bankruptcy?

Bankruptcy is a process that often leaves a lot of people with more questions than answers, but it’s okay. If you’re going through bankruptcy right now, chances are that you are probably going to have people that are asking you to make a lot of decisions that you would otherwise not want to make. One of the first things that you’re going to have to decide on is what debts that you want to keep and which debts you want to actually include in a bankruptcy. For example, you can often keep your house and your car, provided that you’re willing to make the payments.

Despite what debt collectors tell you over the phone, you do not have to reaffirm debts that would otherwise be covered by a bankruptcy. There are going to be times where yes, you’re going to have to give up the property in question, but that doesn’t mean that you will have to give up your house and your car if you’re willing to make the payments continuously. Keep in mind that if you do decide to reaffirm a debt, you will be responsible for making the payments. If you miss a payment, they can seize the property. Bankruptcy doesn’t protect you from this at all.

Reaffirming debts can put you behind in your plans to get out of debt, so make sure that you only do it with things that you really want to keep. For example, if you have a low balance credit card that you know you can handle, it might make sense to keep it instead of turning it over the bankruptcy court.

Keep in mind that you have to get court approval for everything that you reaffirm if you’re in the bankruptcy process. Your trustee will want to make sure that you actually know what you’re doing instead of just assuming that you’re making the right choice. If you have already retained a bankruptcy attorney you also want to let them know what you’re going to hold outside of the bankruptcy.

If you have not entered bankruptcy yet, you will need to realize that debt collectors will indeed try to get you to reaffirm debts that have already existed outside of the statute of limitations. This means that you will end up not only owing the debt, but if you agree to pay anything, you’ll be at risk for a lawsuit. Having a judgment entered right before the debt is no longer collectable can be absolutely difficult to deal with.

Which state counts for the statute of limitations? Generally speaking, it’s where you lived when you entered into the contract unless the contract you signed says otherwise. For example, if you were in Missouri but the contract you signed said that everything would be governed by the laws of California, then you will need to look up the statute of limitations for California. This can get confusing, so you might want to also talk to an attorney if you feel that you’ve got a weird case going on.

The laws can get even trickier. Remember when we said that you would need to reaffirm the debt in a bankruptcy in order to keep the asset it’s connected to? Well, not all lenders require this. So if you really want the straightest answers around, you might want to call your lender for your car and your home and see what their policies are. They might let you just agree to the payments without reaffirming the debt. That can help your bankruptcy case in a big way.

These are complex issues, and it’s hard to give general advice when everyone’s bankruptcy case is going to be different. While we’re on the subject of advice and support, it’s important to make sure that you find support for your situation. You don’t want to go through bankruptcy alone. There’s a lot of negativity that can surround the process, and who really needs negativity these days? It’s better to make sure that you stop and think about the future while you’re living in the present — you’ll make it through this phase of your life and then be ready for the next one!