Yes.  You can back out of any Reaffirmation Agreement you have signed if you act quickly enough.

The proper bankruptcy terminology for canceling a Reaffirmation Agreement is “rescission.”

Bankruptcy law provides that a debtor may rescind a Reaffirmation Agreement at any time prior to receiving a discharge or within sixty days after the agreement is filed with the bankruptcy court, whichever occurs later.

If you have changed your mind regarding a Reaffirmation Agreement you have signed, all you need to do is notify the creditor in writing that you wish to cancel the Reaffirmation Agreement. This is usually referred to as a Notice of Rescission.  In notifying the creditor of your desire to cancel the agreement, you do not have to give any reason for your change of mind.

And once you have provided written notice of rescission, the creditor must return any payments you made while the Reaffirmation Agreement was in force.

If you are considering signing a Reaffirmation Agreement, you first need to think long and hard about what you are about to do.

Ask yourself whether or not you can really afford the monthly payment. And don’t rationalize with yourself. Instead, be brutally honest. If you have any doubt as to your ability to make the payments, do not reaffirm the debt.

When you sign a Reaffirmation Agreement and reaffirm a debt, you are preventing that debt from being discharged (forgiven, canceled or wiped out) in your bankruptcy.

As far as a reaffirmed debt is concerned, it’s as if you never filed bankruptcy. You will still owe every penny of that debt and if you become unable to make the payments in the future, that creditor will still have all of their legal rights to collect the debt, including making collection calls, writing collection letters, suing you, garnishing your wages, etc.

And always consider your other options. For example, instead of reaffirming a car loan that you know you can’t afford, think about giving the car back to the creditor. Especially if you are “upside down” in the car and owe more than it is worth. The smart thing to do would be to surrender your current car. Then buy a cheap used car that you can afford and that will get you back and forth until you can afford something nicer.

Although you file a Chapter 7 bankruptcy to discharge or wipe-out your debts and get a fresh start, you have the option to sign a written agreement to “reaffirm” a debt.  If you choose to sign a Reaffirmation Agreement with one of your creditors, you will still owe that debt after your bankruptcy is finished.

And in the future should you get behind in payments on a reaffirmed debt, that creditor has the right to  come after you in order to collect the debt. Which means that the creditor could make collection calls, send collection letters, sue you, and maybe garnish your paycheck and repossess or foreclose on your property.

Rarely is it in a person’s best interest to reaffirm a debt.

If you are struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation. I would count it a privilege to be able to visit with you in a relaxed and confidential environment where I’ll answer all of your questions in plain English and give you the straight scoop on the pros and cons of bankruptcy as related to your specific situation.