Most people borrow money to buy expensive but necessary property like homes and cars. The debt that is incurred for such purchases is typically called secured debt. A secured debt provides the secured creditor, the bank that loaned the money for the secured debt, with special rights. The secured creditor can not only collect money from the borrower, but if the borrower stops paying, the secured creditor may repossess or sale the home or car securing the debt.
In bankruptcy, secured creditors retain the same right to repossess or sale a home or car, but they must get permission from the court before doing so. In order to prevent a secured creditor from collecting taking the property, the borrower must continue making monthly payments even during the bankruptcy. In some cases, however, the borrower must also enter into a reaffirmation agreement with the secured creditor. A reaffirmation agreement basically is an agreement where the borrower waives the protections of the bankruptcy as to a specific debt so that he/she can keep property.
In Arizona, it is not common practice to sign a reaffirmation agreement for a mortgage as continued payment is usually sufficient to retain the home. It would be very unwise to sign a reaffirmation agreement with an unsecured creditor such as a credit card or doctor because such creditors have not right to collect property from the borrower. Usually, reaffirmation agreements are only utilized to keep cars.
For your FREE consultation today, call Benjamin Skinner, experienced Arizona bankruptcy attorney! (480) 648-8975.
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