Part A: Before agreeing to reaffirm a debt, review these important disclosures;
Summary of Reaffirmation Agreement
This Summary is made pursuant to the requirements of the Bankruptcy Code;
The Amount Reaffirmed
(D) In conjunction with the disclosure of the ‘Amount Reaffirmed’, the statements—
(E) The ‘Annual Percentage Rate’, using that term, which shall be disclosed as—
(i) if, at the time the petition is filed, the debt is an extension of credit under an open end credit plan, as the terms ‘credit’ and ‘open end credit plan’ are defined in section 103 of the Truth in Lending Act, then—
(F) If the underlying debt transaction was disclosed as a variable rate transaction on the most recent disclosure given under the Truth in Lending Act, by stating ‘The interest rate on your loan may be a variable interest rate which changes from time to time, so that the annual percentage rate disclosed here may be higher or lower.’.
(G) If the debt is secured by a security interest which has not been waived in whole or in part or determined to be void by a final order of the court at the time of the disclosure, by disclosing that a security interest or lien in goods or property is asserted over some or all of the debts the debtor is reaffirming and listing the items and their original purchase price that are subject to the asserted security interest, or if not a purchase-money security interest then listing by items or types and the original amount of the loan.
(H) At the election of the creditor, a statement of the repayment schedule using 1 or a combination of the following—
(I) The following statement: ‘Note: When this disclosure refers to what a creditor “may” do, it does not use the word “may” to give the creditor specific permission. The word “may” is used to tell you what might occur if the law permits the creditor to take the action. If you have questions about your reaffirming a debt or what the law requires, consult with the attorney who helped you negotiate this agreement reaffirming a debt. If you don’t have an attorney helping you, the judge will explain the effect of your reaffirming a debt when the hearing on the reaffirmation agreement is held.’.
(J)(i) The following additional statements:
Reaffirming a debt is a serious financial decision. The law requires you to take certain steps to make sure the decision is in your best interest. If these steps are not completed, the reaffirmation agreement is not effective, even though you have signed it.
What are your obligations if you reaffirm the debt?
A reaffirmed debt remains your personal legal obligation. It is not discharged in your bankruptcy case. That means that if you default on your reaffirmed debt after your bankruptcy case is over, your creditor may be able to take your property or your wages. Otherwise, your obligations will be determined by the reaffirmation agreement which may have changed the terms of the original agreement. For example, if you are reaffirming an open end credit agreement, the creditor may be permitted by that agreement or applicable law to change the terms of that agreement in the future under certain conditions.
Are you required to enter into a reaffirmation agreement by any law?
No, you are not required to reaffirm a debt by any law. Only agree to reaffirm a debt if it is in your best interest. Be sure you can afford the payments you agree to make.
What if your creditor has a security interest or lien?
Your bankruptcy discharge does not eliminate any lien on your property. A ‘lien’ is often referred to as a security interest, deed of trust, mortgage or security deed. Even if you do not reaffirm and your personal liability on the debt is discharged, because of the lien your creditor may still have the right to take the security property if you do not pay the debt or default on it. If the lien is on an item of personal property that is exempt under your State’s law or that the trustee has abandoned, you may be able to redeem the item rather than reaffirm the debt. To redeem, you make a single payment to the creditor equal to the current value of the security property, as agreed by the parties or determined by the court.”.
(ii) In the case of a reaffirmation under subsection (m)(2), numbered paragraph 6 in the disclosures required by clause (i) of this subparagraph shall read as follows:
8. If you were represented by an attorney during the negotiation of your reaffirmation agreement, your reaffirmation agreement becomes effective upon filing with the court.”
(4) The form of such agreement required under this paragraph shall consist of the following:
Part B: Reaffirmation Agreement. I (we) agree to reaffirm the debts arising under the credit
agreement described below.
Brief description of credit agreement:
Description of any changes to the credit agreement made as part of this reaffirmation
Co-borrower, if also reaffirming these debts:
Accepted by creditor:
Date of creditor acceptance:
The declaration shall consist of the following:
Certification by debtor’s attorney (if any)
I hereby certify that (1) this agreement represents a fully informed and voluntary agreement by the debtor; (2) this agreement does not impose an undue hardship on the debtor or any dependent of the debtor; and (3) I have fully advised the debtor of the legal effect and consequences of this agreement and any default under this agreement.
“Signature of Debtor’s Attorney: Date:”
(B) If a presumption of undue hardship has been established with respect to such agreement, such certification shall state that in the opinion of the attorney, the debtor is able to make the payment.
(C) In the case of a reaffirmation agreement under subsection (m)(2), subparagraph (B) is not applicable.
Debtor’s declaration in support of reaffirmation agreement
(6)(A) The statement in support of such agreement, which the debtor shall sign and date prior to filing with the court, shall consist of the following:
Part D: Debtor’s Statement in Support of Reaffirmation Agreement.
Debtor’s declaration where reaffirming debt defined under Federal Reserve Act
(B) Where the debtor is represented by an attorney and is reaffirming a debt owed to a creditor defined in section 19(b)(1)(A)(iv) of the Federal Reserve Act, the statement of support of the reaffirmation agreement, which the debtor shall sign and date prior to filing with the court, shall consist of the following:
‘I believe this reaffirmation agreement is in my financial interest. I can afford to make the payments on the reaffirmed debt. I received a copy of the Reaffirmation Disclosure Statement in Part A and a completed and signed reaffirmation agreement.’.
(7) The motion that may be used if approval of such agreement by the court is required in order for it to be effective shall be signed and dated by the movant and shall consist of the following:
Debtor’s declaration if not represented by an attorney
Part E: Motion for Court Approval (To be completed only if the debtor is not represented by an attorney.).
I (we), the debtor(s), affirm the following to be true and correct: ‘I am not represented by an attorney in connection with this reaffirmation agreement.
I believe this reaffirmation agreement is in my best interest based on the income and expenses I have disclosed in my Statement in Support of this reaffirmation agreement, and because (provide any additional relevant reasons the court should consider):
“Therefore, I ask the court for an order approving this reaffirmation agreement. ”
(8) The court order, which may be used to approve a such agreement, shall consist of the following:
“Court Order: The court grants the debtor’s motion and approves the reaffirmation agreement described above.”.
(l) Notwithstanding any other provision of this title the following shall apply: Preliminary draft of March 20, 2005. Subject to change.
(m)(1) Until 60 days after an agreement of the kind specified in subsection (c) is filed with the court (or such additional period as the court, after notice and a hearing and for cause, orders before the expiration of such period), it shall be presumed that such agreement is an undue hardship on the debtor if the debtor’s monthly income less the debtor’s monthly expenses as shown on the debtor’s completed and signed statement in support of such agreement required under subsection (k)(6)(A) is less than the scheduled payments on the reaffirmed debt. This presumption shall be reviewed by the court. The presumption may be rebutted in writing by the debtor if the statement includes an explanation that identifies additional sources of funds to make the payments as agreed upon under the terms of such agreement. If the presumption is not rebutted to the satisfaction of the court, the court may disapprove such agreement.
No agreement shall be disapproved without notice and a hearing to the debtor and creditor and such hearing shall be concluded before the entry of the debtor’s discharge.
(2) This subsection does not apply to reaffirmation agreements where the creditor is a credit union, as defined in section 19(b)(1)(A)(iv) of the Federal Reserve Act.
With Michael J. Rose PC, you get a lawyer who is committed to providing high-quality counsel and representation in the area of Bankruptcy. We can help you find a solution to meet your needs.
From our law office in Oklahoma City, we serve clients in Lawton Enid, Norman, Edmond, Shawnee, Chickasha, Yukon, El Reno, Midwest City, Kingfisher, and Canadian County, Cleveland County, and Logan County.