With any chapter 7 bankruptcy petition it is required to file a “Statement of Intentions”. This Statement of Intention(s) requires debtors to declare what they intend to do with property connected to their secured debts.
One option on the Statement of Intentions is to reaffirm the debt. Reaffirming a debt means that you agree with a creditor to make yourself liable for the total amount of the debt regardless of the value of the property.
You must act on your specified intentions within 45 days after your 341 hearing. Section § 521(a)(6) of the bankruptcy code states the consequences of failing to act very clearly:
If the debtor fails to so act within the 45-day period referred to in paragraph (6), the stay under sections § 362(a) is terminated with respect to the personal property of the estate or of the debtor which is affected, such property shall no longer be property of the estate, and the creditor may take whatever action as to such property as is permitted by applicable non-bankruptcy law…
If you indicate that you want to reaffirm your debt on your Statement of Intentions, but then never enter into a reaffirmation agreement within 45 days of your creditor’s hearing, the automatic stay is lifted and creditors are free to do as they please within the law. So bottom line: either enter the reaffirmation agreement after seriously considering the potential consequences, or amend your statement of intentions in a way that best serves your interests.
If you need help from an Arizona bankruptcy attorney then email us at clint@dunawaylg.com.