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Reaffirming and Refinancing — Option After Bankruptcy?

On Behalf of | Sep 21, 2012 | Chapter 7 Bankruptcy

Deciding to file for bankruptcy is one of the most difficult decisions that a person will ever make. Often, people can be uncertain how serious the financial problems are, meaning that many individuals wait too long to file. Once they begin the process, they learn how easy it can be, and how they can take some steps toward a positive financial future.

One of the major concerns often expressed before filing is the impact that bankruptcy has upon a credit score. People are afraid that they will be unable to rebuild their credit, and will have difficulty obtaining necessary loans.

There are ways that individuals can help this process, and one of these methods includes reaffirming certain debts. For example, if a person has a vehicle loan or a home mortgage, they may decide during the bankruptcy process to “reaffirm” this debt. This means that the individual is promising to pay back any past due balances for the loan or mortgage.

This can help those struggling to keep their vehicles or stay in their homes, which can be extremely important when experiencing financial problems. But, as many Floridians homeowners know, a lot of mortgages are for way more than homes are worth.

Options are available to those who find themselves in this situation. It may be possible to refinance these loans in an effort to find terms that make it easier for individuals to repay. Banks and lenders may see this as an appealing option, especially since this means that they will continue to receive payment, and will not have to begin costly and time-consuming foreclosure proceedings.

Individuals pursuing this direction will need to be aware of some of the potential risks of reaffirming debt. Agreeing to repay these amounts will make individuals personally responsible for the debt. Know the options that are available for each situation before making a decision that can jeopardize the financial future.


Kingcade & Garcia | A Miami Law Firm