Can You File a Reaffirmation Agreement After a Case Is Closed?
If you are going through Chapter 7 or Chapter 13 bankruptcy, creditors might try to use reaffirmation agreements to commit you to pay debts that would normally be discharged through bankruptcy. With this type of agreement, you will assure a creditor that you are liable for the debt on secured property, such as a mortgage or vehicle, at your current monthly payments and interest rates, regardless of bankruptcy proceedings. Your case will have to be reopened after a judge has closed it in order for you to file a reaffirmation agreement.
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Requirements
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Under Section 524(C) of the Bankruptcy Reform Act of 2005, you do not usually have to sign a reaffirmation agreement to hold onto secured property. A reaffirmation agreement will allow the creditor to seize secured assets if you do not make payments. Because your attorney must verify that the agreement will not impose an undue hardship upon you and a bankruptcy judge must approve the agreement, you cannot sign a reaffirmation agreement after a judge closes the case.
Benefits
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A judge might order you to sell certain assets, such as a second car, to satisfy creditors. This type of agreement allows you to keep affirmed assets you would otherwise have to sell. You might voluntarily sign a reaffirmation agreement if the creditor can hold a cosigner responsible for the debt, such as a member of your family. In addition, you will make regular payments on affirmed debt, which the creditor will report to the major credit bureaus, allowing you to build up your credit history faster after a bankruptcy.
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Exceptions
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A creditor can petition a bankruptcy judge to reopen a case after you receive a bankruptcy discharge under Title 11, Section 350 of the United States Code. This exception occurs when a creditor forgets to press his claim against you during bankruptcy proceedings. The judge who presided over your bankruptcy hearing will decide whether or to allow the reopening of the case. If the trustee who helped organize your bankruptcy discovers you lied about debts during the reorganization process, he can choose to reopen the case.
Considerations
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You can also reopen your bankruptcy case by directly petitioning the judge who allowed you to declare bankruptcy. If the judge grants your petition, you can sign a reaffirmation agreement with a creditor, but the judge will still have to approve it. You will have 60 days after signing to rescind the agreement if you change your mind. Voluntary agreements between a debtor and a creditor after bankruptcy discharge are not legally binding, and a court will sanction any creditor who requests you sign an agreement after discharge.
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