When you #reaffirm a debt, you agree that you will still owe the debt after your bankruptcy case ends. Both the creditor’s lien on the collateral (which gives the creditor the right to take the property if you fail to pay as agreed) and your liability for the debt under the original contract survive the bankruptcy.
#Advantages to Reaffirmation
Reaffirmation provides a sure way to keep collateral as long as you abide by the terms of the reaffirmation agreement and keep up your payments. As long as you stay current on the payment, the lender won’t be able to take back the property.
#Disadvantages to Reaffirmation
Because reaffirmation leaves you personally liable for the debt, you can’t walk away from the debt after bankruptcy. If you default on the loan after your bankruptcy then you will still be legally bound to pay the deficiency balance when the creditor repos the car and sells it.
Some creditors will continue to report your payments if you reaffirm your debt however not all will do so. Make sure you confirm with the creditor how they will report on your credit if you reaffirm the debt.
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