A reaffirmation agreement is a legally binding document filed with the bankruptcy court in which you agree to keep making payments on a debt. For example, you are required to sign a reaffirmation agreement if you would like to retain personal property, such as an automobile, and keep making payments after filing your bankruptcy.
Today CNN is running an eye opening article about the tactics and strategies used by debt collectors or creditors. The article covers 10 different people who used to call and harass people for a living. They unveil some of the extreme tactics that creditors use to get money from debtors. A common theme that is seen throughout the ten different stories is the fact that these people make their money by collecting money.
Many of these creditors are on commission and the more money they bring in the more money they make for a living. Is this the best way to ethically collect debt? We too often see that creditors will bend or even break consumer protection laws simply to make a little more money. If they aren’t being commissioned then maybe there would be more civility in the debt collection profession. Regardless, this is a great article by CNN – check it out. The article is called Confessions of Former Debt Collectors.
Although, it’s important to keep statements that you receive in the mail regarding your debts, you should also consider obtaining a credit report.
For many people, it is difficult to remember original creditors, collections agencies, amounts owed, and so on from years past. A credit report is a great way to visually see all of your debts listed out for you, especially if you did not keep statements. Our recommendation would be to look at your statements first, then back it up with a credit report. For many people, this will cover your bases in regards to who you owe, but remember this does not guarantee to be all of your creditors. This is why it’s important to keep up with your statements and also view your free credit report yearly. By doing this, it allows you to see whom you owe, if it’s accurate, and when and where the debt was incurred.
You are entitled to a free credit report every 12 months from www.AnnualCreditReport.com. It is one of the only legitimately free places to obtain a credit report. It will not, however, give you your actual credit score. Use this website, if you have not already done so in the past 12 months, to view your debts and names of your creditors. We recommend checking this annually so you can be sure the creditors on your report are accurate. When filing bankruptcy, it is essential that all of your creditors are listed, so be sure to use both statements and a credit report to back up what you already know regarding your debt.
It’s also a good idea to be sure you get your free credit report again a few months after you file bankruptcy. It will help you rebuild your credit after bankruptcy.
Each month the Trustee receives a payment from you, he will distribute payments to your creditors based on a priority as established by the Chapter 13 plan. If you do not make a payment to the Trustee, he will not distribute payments to your creditors.
These are common questions that many people have about bankruptcy. In an effort to provide you with information we have provided these frequent questions. However, it is important to realize that each state has different rules and these answers are not meant to be legal advice. Contact a bankruptcy attorney to learn more.
Now I know most people will look at this question like, “why in the world would I want to keep my cards if I’m eliminating my debt?!” But occasionally, you will have one company in which you are still in good standing and will want to keep that card in hopes of somewhat holding on to what bit of credit that you have left. It’s just not as simple as that.
Have you ever been in a wreck? The next few days following the wreck, you will be bombarded with advertisements from attorneys claiming that they can help you in whatever service you may need from being in the accident. Many wonder how they even knew about the wreck in the first place! Well filing bankruptcy is a similar situation, once you file it is public knowledge and your creditors, whether they were included in the bankruptcy or not, will likely find out about the bankruptcy and will cut the usage of your account off. Most creditors’ fear violating the bankruptcy’s automatic stay so they will discontinue usage of the credit card. So in the situation of a credit card in which you wish to keep, you may have never missed a payment and have been in good standing and they will still cut the usage of the card off, which is why we recommend that you list ALL of your debts.
Should you wish to try to keep a credit card out of the bankruptcy and wish to continue making the payment, then you need to contact that credit card company and give them a heads up on what your intentions are and ask for permission to have that card be kept out of the bankruptcy filing. It will be completely and solely the discretion of the company whether or not they allow you to keep the card out of the bankruptcy and continue to make the payments, and report the standing to the credit reporting agencies.
If you don’t list down a credit card, with the hopes of keeping it, and then after filing the bankruptcy they shut it down anyways, you are still responsible for the debt. For example, if you have a Visa credit card with Wal-Mart and you talk with Visa and explain you are filing bankruptcy and they say they will allow you to keep the card but, after filing, they still shut it down, you are responsible for any remaining balance on the card. You may still be able to go back and amend the bankruptcy after the credit card company refuses to allow you to keep the card but there will be court costs involved in amending the bankruptcy.
Again, we always encourage our clients to list down all of their debts. You can rebuild your credit after bankruptcy and in order to get your fresh financial start it usually means wiping out all of your debts.
Generally speaking, bankruptcy will not stop an eviction. In 2005, the bankruptcy laws were changed under the Bankruptcy Abuse Prevention Consumer Protection Act. This act prevents bankruptcy from stopping evictions on rental properties, which are properties that are being leased. In other words, if you are facing an eviction from an apartment or rental property bankruptcy cannot stop that eviction process. However, bankruptcy may still be an option for you to consider. Depending upon your landlord, they may come after you for the past due rent. They could sue you and get a judgment against you on the amount past due. Filing for bankruptcy will wipe out the amount owed to your landlord and stop them from getting the judgment or wipe out the judgment if they had already obtained it.
What if you have a house that is facing a foreclosure though? If you have been given a notice of sale or foreclosure on your home, then bankruptcy may be an option to consider. Here is more information on how bankruptcy can stop the foreclosure of a home. Be sure to contact an attorney as soon as possible to explore your different options.
In a Chapter 7 bankruptcy and a Chapter 13 bankruptcy, the court will send a Notice of Meeting of Creditors within a few days of your filing. This is the official notification to your creditors of your bankruptcy filing and it provides them with the date of the creditors meeting. It also creates the automatic stay which keeps your creditors from taking legal action against you.If you discover that you failed to list a creditor you owed when your Chapter 7 bankruptcy was filed, you may be able to add the creditor to your bankruptcy prior to your discharge. It is important for you to contact your bankruptcy attorney immediately to see if you can add the creditor to your bankruptcy. If you have not received a discharge, you may be able to add the creditor and still have the debt discharged in the Chapter 7 bankruptcy. Once the discharge has been entered, you may not add any additional creditors without reopening your bankruptcy.
If you filed a Chapter 13 bankruptcy and discover that you failed to list a creditor that you owed when your bankruptcy was filed, you should also contact your attorney. Depending on whether your Chapter 13 bankruptcy has been confirmed by the Court will depend on what actions are needed. If your case has not been confirmed, you may be able to simply add the creditor with the bankruptcy court. If your case has been confirmed, it may be necessary for you, through your attorney, to file a motion to modify your bankruptcy and add the creditor.
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Person Filing Surrenders Property
First of all, keep in mind in order to file a Chapter 7 bankruptcy you must be current on everything unless you are willing to surrender the property. Let’s consider the following example: you owe on a debt such as a car loan, but are behind on the payments. You come in for a free consultation, learn that you may be eligible to file a Chapter 7 bankruptcy, and decide you are going to surrender the property to the creditor since you are behind on payments. However, someone has cosigned on the debt with you, and you are wondering what that is going to mean for the other person. He or she (the cosigner) would still be responsible for the full amount that is owed to the creditor. The creditor will typically sell the property an auction and the cosigner will be responsible for the deficiency balance.
If the debt is an unsecured debt (no property as collateral) then the creditor can go after the cosigner for the full amount owed on the debt.
Person Filing Keeps Making Payments
Person Filing Surrenders Property
If you are filing Chapter 13 bankruptcy and have decided to surrender property, the cosigner will be affected in regards to the debt. Typically speaking, the creditor will still seek the amount owed from the cosigner and hold them responsible for the debt amount after it has been sold at an auction. It’s up to the person filing whether or not to let the cosigner know that they are going to be surrendering the property. However, it’s important to know the cosigner will be responsible for paying back the deficiency balance on the debt.
Person Filing Does Not Surrender Property
In a Chapter 13 bankruptcy, if the person keeps making payments on the property and decides not to surrender it, the cosigner will not be affected most of the time. Chapter 13 bankruptcy is a repayment plan but as long as the person filing is making payments on the debt, the cosigner should not be impacted. However, there have been rare situations where we have seen someone who has cosigned on a debt with a person who filed a Chapter 13 bankruptcy and on the cosigner’s credit it shows they are one month behind on payments despite the fact that it is being paid within the Chapter 13 bankruptcy plan. Since the Chapter 13 bankruptcy Trustee does not make the full payment each month (they typically pay 1/60th of the amount owed over the course of 60 months) the creditor may report that the cosigner is behind a portion of a payment. This doesn’t happen often but we have seen it before so we wanted to be sure to make you aware of it.
Your mortgage company has most likely refused your payment because the mortgage company has received notice of the automatic stay that goes into effect as soon as your bankruptcy is filed. They are probably concerned that they will be in violation of this “stay” if they agree to accept a mortgage payment. A lot of the time this can be cleared up with a simple phone call. If they send the payment back, try sending it again certified mail and keep copies of your receipts. This will help prove that you have been trying to make the payments if needed.
You can always contact you bankruptcy attorney’s office. Usually they will contact the mortgage company for you and make it so that they will begin to accept your payments again. Most importantly, if the mortgage company does not accept your payment, do not go and spend that money! You will eventually pay that mortgage payment and the fact that they did not accept it when you tried to make the payment is not a sufficient excuse to no longer have the payment. Put the money that would be going to the mortgage company in your bank account and leave it there until you have cleared up the misunderstanding with the mortgage company.
