Many people throughout the nation, no doubt including some in Louisiana, have fallen upon hard times financially. Some will likely be able to resolve their financial problems by adjusting their spending habits. Others, however, face debt situations that have gotten out of control, and they have no feasible means for eradicating their problems. Chapter 7 bankruptcy is often the most viable solution, and in cases where the person who owes money is looking for ways to retain a secured asset, such as an automobile, a reaffirmation agreement may be possible.
When someone reaffirms a debt, it not only means he or she gets to keep the asset in question, it also means the person is agreeing to retain the liability as well. Therefore, the debt will still be owed and payments still need to be made until the debt is satisfied. Debt reaffirmation must take place before the debt in question is discharged through Chapter 7 bankruptcy.
To qualify for a reaffirmation agreement, the person owing a debt must be able to show proof of consistent, reliable income enough to make payments until the entire debt is paid off. If someone is unable to do so, the court may decide to deny the reaffirmation request. Certain debts are not re-affirmable because they are not dischargeable in the first place. These include child support, tax debt or restitution orders following criminal convictions.
As with most issues concerning Chapter 7 bankruptcy or other forms of debt relief, it is helpful to consult with an experienced Louisiana attorney before choosing a particular path. An experienced attorney knows which options are best suited for which types of situations. By relying on skilled guidance, a person seeking debt relief solutions may be able to find ways to keep his or her car, home or other big-ticket asset while working toward restored financial stability by discharging most other debts.
Source: FindLaw, “Chapter 7: Debt Discharge“, Accessed on April 30, 2018