Reaffirmation Agreements in a Bankruptcy: What Are They?

01.28.2011

When you file a Chapter 7 bankruptcy case, you also file a statement of intention with respect to property that is secured by consensual liens (car loans, furniture loans etc.). Bankruptcy law requires you to “perform” or move forward with your intentions regarding fina X Anced personal property within 45 days of the meeting of creditors, or else the automatic stay terminates and the creditor is no longer prevented from repossessing the collateral.

The options an individual has in dealing with a secured creditor in this situation are as follows:

Surrender: The collateral may be surrendered back to the lender who will sell the property and apply the proceeds to the outstanding balance of your loan. Assuming your case completes and you receive a discharge, any deficiency balance owed on the property will be eliminated in the bankruptcy. This is a good option if you are unsure you will be able to make the payments moving forward, or if the collateral is damaged and you owe more than the property is worth.

Redeem: Bankruptcy law allows debtors to “redeem,” or buy out personal property secured by liens for the market value of the property rather than what’s owed on it. The downside here is that you must pay the lender the market value in a lump sum which is difficult for most. There are lenders who will finance a loan for the market value of the property, however the interest rates are high and should be factored into the overall net benefit to the debtor.

Reaffirm: This option has legal consequences that should be considered carefully before a decision is made. A reaffirmation agreement is a contract that puts the debtor “back on the hook” for the debt despite the bankruptcy. This is the downside of reaffirming a debt. If you default in the future at any time, the creditor can repossess the collateral AND sue you for any deficiency balance you may owe. It is the rare exception that a debtor should agree to reaffirm a debt, and it is not an option recommended by The Larkin Law Firm absent special circumstances (ie. lower interest rate or principal balance reduction). The only benefit of reaffirming a debt is that the payments made after the debt is reaffirmed are reflected on your credit report to help you begin to reestablish credit. That being said, there are many other things you can do to reestablish credit after a bankruptcy without reaffirming, and this alone should not be the sole consideration in making a decision to reaffirm.

Retain and Pay: Most secured lenders will continue to accept your monthly payments and allow you to keep the collateral even if you haven’t indicated intent to reaffirm your debt. This is known as the “retain and pay” option. It is an informal option not specifically recognized by the Bankruptcy Code. Retain and Pay is an attractive option if the lender will accept it. However, debtor’s choosing this option must be comfortable with a lack of certainty or predictability. Some lenders like Ford Motor Credit, GMAC and Daimler Chrysler state they will repossess vehicles unless the debt is timely reaffirmed. Other lenders like Toyota typically feel that it is better to receive monthly payments under the informal “retain and pay” option rather than lose money by selling repossessed vehicles at auction prices. It is possible, however, that you think your lender has decided to continue to accept your payments only to wake up one morning and find your vehicle gone. Additionally, if you choose the “retain and pay” option, your billing statements will likely stop being sent to you, because from a legal standpoint, the debt has been discharged and creditors are not supposed to bill you for debts that have been discharged in bankruptcy. Some lenders will resume billing statements provided you send them a request in writing.

The bottom line in choosing which option is best for you is to make sure you understand all of them. It is imperative that you speak with a qualified attorney before deciding how to proceed.

jeffphoto Mr. Larkin is one of the most productive debt-relief attorneys in the region. His innovative firm’s goal is intelligent debt solutions customized to his clients’ individual needs. Mr. Larkin has served as an associate for the two largest bankruptcy filing firms in San Diego. In 2008, Mr. Larkin was one of the top five bankruptcy filers in San Diego County, according to the U.S. Bankruptcy Court, So. Dist. of Cal. Go to http://www.live-debt-free-now.com for your free consultation today.

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Some Questions to Ask Before Choosing a Bankruptcy Lawyer

01.26.2011

Bankruptcy filing is one of the most major decisions that anyone can make and should never be taken lightly. Bankruptcy provides consumers a way to start again and begin fresh financially. To choose a bankruptcy attorney is not so easy. Finding a good bankruptcy attorney is like making a great investment for a better future. The following are questions to ask before hiring bankruptcy representation.

Does your prospective bankruptcy attorney sit on your local bankruptcy court panels? The bankruptcy lawyers on these panels are typically well-respected attorneys who regularly appear in bankruptcy court. The discretion, analysis, and judgment of a knowledgeable attorney are necessary from the very beginning and are something that should not be compromised.

How can you find a bankruptcy attorney? Bankruptcy filing is a long, complicated and tedious process. A person who wants to file bankruptcy is emotionally spent and unable to deal with the requirements, filings, and handling of bankruptcy cases. The main questions are how do you find the right bankruptcy lawyer? What is the correct way or guideline to follow when hiring one? The answers may surprise you. The best bankruptcy attorneys are the ones who do not automatically assume every client should file a bankruptcy. A good bankruptcy lawyer is flexible about which solution to pick, and put the client’s interests first.

If your debt is out of control and you are seeking debt relief, call San Diego Bankruptcy Lawyer Jeffrey Larkin, with a bankruptcy law office in Carlsbad, CA at 1.877.25.NEW.HOPE (1.877.256.3946) or visit his website http://www.live-debt-free-now.com for your free consultation with a bankruptcy attorney today.

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Bankruptcy and The U.S. Auto Manufacturing Market

01.19.2011

With the benefit of historical hindsight, bankruptcy might one day be seen as merely a revitalization for the “big three” U.S. Automakers: GM, Chrysler and Ford. The protection afforded by the federal bankruptcy laws by auto manufacturers could later be seen to have been a positive development in the long term, following further short losses.

Classical economic thought suggests that the only way out of troubling economic times would be for the U.S auto industry to spend on research and development and manufacture more efficient vehicles at a consumer-friendly price. Perhaps it is time to pursue unconventional economic ideas. Perhaps the outc me will benefit the entire U.S. economy.

Union costs contribute to the auto industry’s continual flow of red ink. While acceptable in the 1960’s, 1970’s and 1980’s, today’s recovery-driven marketplace has no use for such bloated budgetary views. Today we live in a global marketplace, where the demand for labor is met by supply overseas.

Because of globalization, and the fact that there is more competition by new car companies who do not have these legacy costs, the big three simply cannot compete. While this would likely have a negative effect on millions of individuals who derive their livelihood, either directly or indirectly, from the auto industry, it is a necessary evil. Ultimately, the most logical contribution that the government should make is to help the individuals affected by bankruptcy. The government should use the billions of dollars earmarked for the auto industry to help those affected by the industry’s restructuring. The money should not go directly to the big three automakers. Throwing more money at the auto industry without the auto industry reducing its price and overhead will just delay the inevitable implosion of the industry, not prevent it.

If you need the advice of a top San Diego Bankruptcy Attorney, call the Larkin Law Firm at 1.877.25.NEW.HOPE (1.877.256.3946) or visit the Carlsbad Bankruptcy law firm’s website today at http://www.live-debt-free-now.com for your free consultation today.

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The American Automotive Industry and Bankruptcy

01.14.2011

Although Ford is not doing well, the automotive giant barely managed to avoid bankruptcy. The key to Ford’s successful brinkmanship has been its new policy of constraint, through which Ford found itself losing less than originally expected. That has meant that Ford has gotten a handle on how to survive in this rough economic environment and may survive it relatively unscathed.

General Motors (GM) took a move once viewed as unthinkable, but which became inevitable after years of losses and market share declines capped by a dramatic plunge in sales in recent months. It declared bankruptcy.

The bankruptcy is likely to lead to major changes and job cuts at the
battered automaker. But President Obama and GM CEO Fritz Henderson both promised that a more viable GM will emerge from bankruptcy. In the end, even $19.4 billion in federal help wasn’t enough to keep the nation’s largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization.

GM’s owner should see the change as a result of the bankruptcy since warranties will still be honored. But there will be plenty of pain caused by the bankruptcy and the company’s efforts to stem losses. GM will shed its Pontiac, Saturn, Hummer and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year. That could result in more than 100,000 additional job losses if those dealerships are forced to close.

If you need a loan modification, or are looking for advice from a Carlsbad bankruptcy attorney, call The Larkin Law Firm today at 1.877.25.NEW.HOPE 1.877.256.3946 or go to our website http://www.live-debt-free-now.com for a free consultation with a San Diego Bankruptcy lawyer today. The Larkin Law Firm - Intelligent Debt Solutions tailored to fit your individual needs.

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Automotive Industry Crisis in the United States

01.14.2011

Bankruptcy is just a long-term solution to revitalize the “big three” Automakers, Chrysler, General Motors (GM), and Ford. Many people thought that the U.S. government should not bail out the United States Automakers. The automotive industry and other blue collar industries aren’t the only ones hurting in this economic environment.

As of now, Ford is keeping its head above water, but GM is teetering on the cliff of declaring bankruptcy and Chrysler has already taken the plunge and declared bankruptcy back on April 30, 2009. This allows for the grim but informative opportunity to see how companies are able to avoid bankruptcy in tough economic times (Ford), see what actions companies take to signal whether or not they are going to declare bankruptcy (GM), and how companies handle bankruptcy once they have already filed (Chrysler).

If your own personal debt is crippling and you need debt relief, call San Diego Bankruptcy attorney Jeffrey Larkin, with a bankruptcy law office in Carlsbad, CA at 1.877.25.NEW.HOPE 1.877.256.3946 or visit his website http://www.live-debt-free-now.com for your free consultation with a Carlsbad bankruptcy attorney today.

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