When a debtor files for bankruptcy, they have the option to reaffirm certain debts. This means they are agreeing to continue paying off the debt, despite the bankruptcy filing. However, sometimes debtors regret this decision and want to rescind, or cancel, the reaffirmation agreement. This article will explore the reasons why a debtor may want to rescind a reaffirmation agreement and the steps necessary to do so.
Reasons for Rescinding a Reaffirmation Agreement
There are a few reasons why a debtor may want to rescind a reaffirmation agreement. One reason may be that they can no longer afford the payments, and they don`t want to risk defaulting on the debt. Another reason may be that they`ve realized they no longer need to keep the asset that was secured by the debt. For example, if a debtor reaffirmed a car loan but later found they could easily get by without a car, they may want to rescind the agreement.
Steps to Rescind a Reaffirmation Agreement
If a debtor wants to rescind their reaffirmation agreement, there are specific steps they need to take. The first step is to file a written notice of rescission with the court. This notice must be filed within 60 days of the reaffirmation agreement being filed or before the discharge of the debtor is granted, whichever comes later.
The notice of rescission must include the following information:
– The debtor`s name and bankruptcy case number
– The creditor`s name and the debt being reaffirmed
– A statement that the debtor is rescinding the reaffirmation agreement
– The date the reaffirmation agreement was signed
The debtor`s attorney or the debtor themselves must sign and date the notice of rescission.
Once the notice of rescission is filed, the creditor has 30 days to respond. If the creditor does not respond within 30 days, the rescission is considered effective. If the creditor does respond, they may choose to challenge the rescission in court.
In Conclusion
Rescinding a reaffirmation agreement is a serious decision that should not be taken lightly. Debtors should carefully weigh the pros and cons before deciding to rescind. If they do decide to rescind, they must follow the correct steps to ensure the rescission is effective. By doing so, they may be able to find some relief from their financial burdens and move forward with a fresh start.