Reaffirmation Agreements:

Some secured creditors will request that you sign a reaffirmation agreement after your bankruptcy has been filed. A reaffirmation agreement puts the terms of your contract with the secured creditor back into place, as if a bankruptcy had not been filed with respect to that creditor. A reaffirmation agreement benefits your secured creditor because it allows the creditor to sue for a deficiency balance on the loan, should the you ever default on the contract.

Reaffirmation agreements are entirely voluntary. To be valid, the agreement must be signed by the debtor, the creditor and then approved by the Court. A secured creditor normally will not enter into a reaffirmation agreement if the loan payments were not current on the day that the bankruptcy was filed.

Real Property:

Reaffirming on a first mortgage puts the terms of the old contract back into effect. This can mean for example, that your creditor can send you statements, and report your payments to the credit bureaus.

In Oregon, if you fall behind on your first mortgage payments and your home is foreclosed, you cannot be held responsible for any deficiency. A deficiency exists if you owe more money for the property than your creditor was able to resell it for. It is important to understand that this protection only applies to first mortgages. If you sign a reaffirmation on your second mortgage (if applicable) and your home is foreclosed, you can be held responsible for a deficiency.

If you do not sign this agreement your creditor may allow you to keep the property for as long as you make payments. However, your creditor may not send you statements or report your payments to the credit bureau. You must send your payments on or before the due date even if you do not receive a statement.

Automobiles:

If you sign a reaffirmation agreement on your automobile and it is later repossessed, your creditor can hold you responsible for any deficiency. This also means that if your car was ever stolen or wrecked, you would continue to owe your creditor. However, if you do not sign and file a reaffirmation agreement for your vehicle, you creditor may repossess it, even if you are current on your payments.

You may attempt to keep your vehicle without filing a reaffirmation agreement. If you choose this option, you must make your payments on time each month. You should know that your creditor may repossess your vehicle at anytime and any payments made will not be refunded in the case of repossession If you do not sign a reaffirmation agreement on your automobile, you can simply surrender the car to the creditor without any continuing liability.

Jewelry and other secured property:

Jewelry is unique in that it tends to maintain its value and can be easily resold. Therefore, jewelry creditors will often pursue collection of jewelry if you fail to make your payments. You may have other secured household property such as furniture or computers. These items tend to lose value quickly, therefore creditors are less inclined to try to repossess them. The newer and more valuable your property is, the more likely it is that a creditor would repossess it for failure to make payments.

You may wait for your creditor to contact you, or if you wish you can contact the creditor immediately to discuss payment options. Remember, your creditor may repossess your secured collateral if a reaffirmation agreement is not filed with the Court prior to your discharge date. If you contact the creditor, it is a good idea to have a reasonable idea of the fair market value of your jewelry or other property. Rather than agreeing to pay what you owe on the jewelry or property (an amount that probably includes interest and fees), you may propose to pay only the fair market value of the item.