WHAT DOES IT MEAN TO REAFFIRM YOUR MORTGAGE IN A BANKRUPTCY?

While bankruptcy can help you get rid of your debt in general, you may want to recommit to the terms of your mortgage. People who can can afford to pay the mortgage and want to keep the home may choose to reaffirm.  The promise to repay a mortgage after bankruptcy is known as reaffirming the  debt. Whether you want to take this step depends on your circumstances and the type of bankruptcy you file.

A “reaffirmation agreement” is a legal contract that states your promise to repay all or a portion of your debt which might have otherwise been released in a bankruptcy case.

WHY REAFFIRM YOUR MORTGAGE DEBT

If you are current on your loan payment and able to make future payments, reaffirming informs the lender that you intend to pay the mortgage.  This allows you keep your home during bankruptcy as long as you abide by the terms of the reaffirmation agreement and make payments.  When you reaffirm your debt this payment will be reported on your credit report and help rebuild your credit.

 SHOULD YOU REAFFIRM?

Each situation is unique and differs based on your payment history and your ability to pay in the future.  If you are able to make your mortgage payment, reaffirming may help ensure the mortgage company reports your payments to the credit reporting agencies.

However, if financial difficulties prevent you from making this commitment and you want to be released from your mortgage in bankruptcy, you should not sign a reaffirmation agreement.

MORE INFORMATION

If you are struggling financially bankruptcy may be your best option.  Contact Keegan & Company Attorneys to schedule a free consultation to discuss your unique situation with an experienced attorney.