Legal Personal Finances

Bankruptcy: What Are Your Rights?


Then, all the debtor’s assets are evaluated to see if some of the debts can be paid by using the existing assets. The process is entirely handled by the federal courts and rules are based on the US Bankruptcy Code.

It’s common for an individual or a business to declare bankruptcy to get a fresh start. But the bankruptcy itself will stay on your credit reports for a few years in the future. If you’re planning to borrow more money, you should know that your credit reports will make it for you to do so.

So, after declaring bankruptcy, you have many responsibilities. But what are your rights? Obviously, you still have your rights as an individual even after going bankrupt. And I want to explain to you, your rights.

You can still get credit

After your bankruptcy case is over, your credit record will stay with you for a decade. This is counted from the day you filed your bankruptcy. This credit report includes your discharged debts as having a zero balance.

So you do not owe anything, everything is gone. You have no more obligations to pay your debts. Otherwise, if you find any false information regarding your debts and credit, you should file a dispute with the credit reporting agency.

But you can still buy a car or a house, get a loan or a credit card too. The problem would be how you can pay them back.

You can reaffirm your debts

What it means is that after your bankruptcy case you can reaffirm your debts by signing a written agreement. Any debts you reaffirm, you are legally to pay them back. This will effectively the effect of bankruptcy in canceling your debts.

They will seize your assets if you fail to pay the debts you reaffirmed. So be careful about this. Reaffirming a debt is a big decision and you should think it through. Don’t reaffirm your debts without knowing what it entails.

Some people reaffirm their debts after negotiates better terms like lower the amount you owe, interest rate, or monthly payment. And a reaffirmation is a new separate contract between you and the creditor. Reaffirmation is very useful if you want to keep your house or car after bankruptcy.

Remember that a reaffirmation agreement must be in a writing form and your lawyer must sign it before the judge can give their approval, and the entire process must be over the bankruptcy itself is over. Otherwise, if all these requirements aren’t met, the agreement is invalid. And obviously, don’t reaffirm your debts if you can’t pay them back.

You can cancel after you reaffirm

Luckily for you, you also have the right to cancel after you reaffirm, as long as you do it before sixty days. You also have the right to cancel any time before your discharge order. You don’t even have to give a reason why you want to cancel, just notify the creditor and they will cancel the reaffirmation.

Many people made the mistake of reaffirming their credit cards without knowing how much money they have to pay in return.

If you have made any payments after you reaffirmed your debts and before you canceled them, the creditor will give you your money back.

You can redeem the collateral

You have the right to redeem your items after the creditor took them away. Maybe you don’t want to give the creditor too much of your belongings and you can do so by paying them in a lump sum the same amount the item is worth.

This is even better knowing that household items go down in value really quick after they are used. You can redeem the items for cheaper than the original prices. A lot of people have saved hundreds of dollars this way. It’s very useful during the financial crisis.

Always be careful when handling your bankruptcy case

Bankruptcy isn’t the end of everything. You can still salvage what’s left and start from scratch. Many people have done that, and you can do it too. Just learn what your rights are and get the best out of the situation. Debts, credit, assets, and collateral are some of the important things you must take care of.

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