What does it mean to reaffirm after bankruptcy?
After successfully filing for bankruptcy, you may receive a letter in the mail from your bank asking you to reaffirm your mortgage. It is important to know a few things about this before you reply to the letter in any way. The first thing is that reaffirming your mortgage offers you absolutely no benefits. By reaffirming, you are essentially agreeing to take legal responsibility for the debt that was just cleared in your bankruptcy. You are under no obligation to reaffirm your mortgage, despite what the bank representatives may say. As long as you make regular payments on your lien, the bank cannot foreclose on your home.
Things to Remember
With any mortgage loan, there are generally two elements to consider. The first is the initial loan, which is similar to any other type of debt. The second is the lien itself, which is not affected by a bankruptcy filing. When a bank contacts you asking for reaffirmation, they essentially want you to agree to cancel any protections you secured on your initial loan by filing for bankruptcy. By reaffirming, you give the bank the following rights:
- To pursue legal action against you
- To garnish your wages
- To seize your assets
While the letter from your bank may make it seem like you have no choice, the truth is that you are likely under no legal obligation to reaffirm this loan. Reaffirming a debt gives the banks back the power that your bankruptcy took from them in the first place.
Contact a Bankruptcy Attorney
It’s a sad fact that many guileful banks take advantage of debtors who do not know or understand their rights after a bankruptcy. For this reason, it is in your best interest to contact a bankruptcy attorney right away if you are contacted by any creditors after your bankruptcy is filed or completed. If you have questions regarding the bankruptcy process or the actions of your creditors, call the Dallas offices of Gagnon, Peacock & Vereeke, P.C., at (214) 317-4448 to speak to an experienced attorney today.