If you’re struggling or unable to pay your bills each month, declaring bankruptcy can provide debt relief. However, this may require giving up valuable assets, such as a house or car, especially if you still owe money on them. One way to retain your vehicle while gaining a fresh financial start is to reaffirm the vehicle by signing a reaffirmation agreement. You agree to remain responsible for rest of the loan and will continue making payments even after filing bankruptcy. Here are some of the top benefits of reaffirmation.

3 Reasons to Reaffirm Debt 

1. Ability to Keep Assets

Reaffirming debt allows you to keep assets as long as you’re able to satisfy the conditions of the agreement and stay current on payments. After receiving debt relief through bankruptcy, you should have more income available to meet these loan obligations.

2. Potential to Renegotiate 

When reaffirming a debt, you will begin a new contract with your creditor, which presents the opportunity to renegotiate different terms for your loan. You may be able to decrease monthly payments, lower the interest rate, or reduce the principal amount owed. 

3. Opportunity to Rebuild Credit Quicker 

Though it allows you to enjoy debt relief, filing bankruptcy will cause your credit score to drop and make it difficult to secure new lines of credit. A reaffirmation will help you start rebuilding credit quickly by showing you are able to make loan payments on time each month. Before long, you should see your score begin to rise again and new credit offers come in. 

Reaffirming debt can offer a viable solution for keeping your vehicle, but it isn’t a decision to make lightly, which is why you should consult a bankruptcy attorney before entering into an agreement with your creditors. Greg Dunn, Bankruptcy and Debt Relief Attorney offers more than 20 years of experience helping Honolulu, HI, residents achieve their financial goals. He can provide valuable advice on your debt relief options and will carefully assess your unique situation to determine if reaffirmation is the right choice to make. Call (808) 524-4529 to schedule a free consultation, or visit the website to learn more about how he can serve you.