Balena Law Firm, LLC charges an attorney fee to process and submit a reaffirmation agreement. First let me define a reaffirmation agreement. This is a contact between you and a creditor agreeing to remove a debt, usually secured, from the protection of your bankruptcy discharge. Basically you continue to pay the debt. If you default, they can repossess the collateral and sue you for any deficiency, even though you filed bankruptcy.
The first step to reaffirmation is the Statement of Intention contained in your bankruptcy petition filed with the court. For each secured debt you must disclose how you intend to deal with the debt. You disclose if you will surrender the collateral, reaffirm the debt, or attempt to retain the collateral and just keep paying the debt.
The bankruptcy code requires you perform your intention within 45 days of filing your petition. Failure to do so entitles the creditor to repossess the collateral (usually a car) without notice. Most creditors in Northern Ohio will go along with the retain and pay option with two exceptions, Ford Motor Credit, Ally, Santander and Capital One Auto Finance. If you don’t reaffirm a car loan with these lenders they will come for the case, some without warning.
Balena Law Firm, LLC does not recommend you sign a reaffirmation agreement. Generally there is no benefit to you if you sign it. All benefit flows to the creditor. The Bank or creditor will prepare the reaffirmation agreement. If they do the drafting why do I charge a fee?
- I need to be sure the agreement is completed correctly
- I need to determine the payment will not pose a hardship and note this conclusion on the agreement and confirm it with my signature.
- If I elect not to sign the court will set a hearing I am required to attend with you.
You and I must establish that you can afford to continue to pay this debt. First, you need to demonstrate that paying will not pose an “undue hardship”. Schedule I and Schedule J need to reflect a positive cash flow including the payment you want to reaffirm. If not, the court will not approve the agreement even if you want to keep the collateral.
You will need to sign the reaffirmation agreement. No biggie there. There is also a place for me to sign. By signing your reaffirmation agreement I am expressing an opinion in writing that you can afford to make the ongoing payments. If I sign the court will approve the agreement without a hearing. End of story.
What happens if I think you cannot afford the payments on the reaffirmed debt going forward?
Then I do not sign the reaffirmation agreement and I do not designate if the agreement will cause a presumption of undue hardship. I return it to the creditor with your signature only. The creditor can still file it with the court, although many will not. Without my signature, the judge will schedule a hearing to decide if you can afford the payment. The sharp stick in the eye is that I will have to attend the hearing since I am your lawyer, and you get to pay for my excellent company.
Real and important tasks and decisions go into completion of a reaffirmation agreement. These require a commitment of time as well as legal and factual analysis concerning your ongoing financial picture. As a result I charge a set fee to process each agreement, with added hourly fees and expenses if the bankruptcy court sets approval of the reaffirmation agreement for hearing. All this is spelled out in your bankruptcy fee agreement.
I counsel against reaffirmation If you insist against my advice, then I will add the additional fee into the legal fee for the bankruptcy, or if you decide after filing, I will charge you for each reaffirmation agreement then.