Chapter 7 Reaffirmations

The primary complaint of many discharged Chapter 7 cases is of their mortgage and auto finance companies reporting debt incorrectly that was listed as reaffirm on petition. The creditors that do not provide our office with Reaffirmation agreements will then list the debt as discharged on the credit report. Auto creditors will then repossess a car as soon as one payment is missed, or will just not recognize the payments in their system at all. Some debtors have even reported payments being rejected by a creditor after receiving a Chapter 7 bankruptcy discharge.

Chapter 7 reaffirmation agreements are to be initiated by the creditor. Many debtors call to report that the creditor states that this responsibility lies in the hands of the representing attorney’s office. I explain the debtor that this is voluntary agreement between creditor and the debtor, therefore our office is only the filter for which the paperwork runs through. Our office is unable to generate reaffirmation in such cases, because we do not have all the contract obligation information.

Should the Chapter 7 debtor’s Attorney put more effort into initiating the reaffirmation agreements or should this still be left in the hands of the creditor? The long term affect on credit report reflects that not signing the reaffirmation prohibits the debtor from using the mortgage or auto debtor from rebuilding credit after discharge.

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