In bankruptcy, debts secured by personal assets (not real estate) need to be paid to retain them, otherwise, the creditor can repossess the property. Apart from this, there is one more way that lets you keep your assets – reaffirmation.
Reaffirmation means that you’ll be responsible for the debt even after your discharge from bankruptcy. Below are a few tips to negotiate a great reaffirmation agreement with the creditor, in the case of Chapter 7 bankruptcy.
How to Negotiate the Reaffirmation of a Car Loan?
It’s important to know the kind of loan you have while negotiating the reaffirmation for a car loan. They usually have two categories – ‘purchase money’ loan or ‘non-purchase money’ loan. The latter provides you with better chances of saving a considerable amount of money than a purchase loan.
- Purchase Money Car Loans – In a purchase money car loan, the loan money used to buy the vehicle (original financing) becomes your debt, irrespective of whether you bought a new vehicle or a used one. It is difficult to negotiate better-reaffirming terms with creditors in this type of loan. There are better chances to save money, in case the creditor is a small bank. On the other hand, major banks and vehicle manufacturers may provide you with a decent reduction in the rate of interest and no negotiation at all, respectively.
- Non-Purchase Money Car Loans – All the other vehicle loans come under a ‘non-purchase’ money loan. You will probably get great deals in such loans, as they are usually on older vehicles. Older cars with high mileage will give better chances of saving a lot of money since the lenders are well aware that they can’t sell them at very good prices in the market.
How to negotiate?
You should ask the creditor to decrease the rate of interest and the loan balance. There are high chances of counter offers from the creditor’s side, so make sure that your first offer is of a lesser amount than what you are actually willing to pay.
Tips for Cracking Desirable Negotiations
A non-purchase moneylender won’t try to repossess your car unless there’s no other reasonable way out. Pretend that your car is in terrible condition. Remember, desperate willingness to give away the asset will fetch you better deals, especially in the case of jewelry, cars and other kinds of personal assets. Since furniture and electronics don’t hold any re-sale value for the lender, an eagerness to surrender them will get you much better deals.
Let’s discuss some more tips for negotiation of reaffirmation agreement on different assets.
- Jewelry Debts – It’s important to know the street value of your jewelry before negotiating with the lender. This will probably aid you in securing a reaffirmation agreement of about half the amount, which you still owe on that jewelry.
- Furniture – In order to crack a great reaffirmation deal on furniture, pretend that it’s in a terrible condition, and thus you are eager to part with it. The tactics used for negotiating reaffirmation on furniture are the same as used for non-purchase money car loans. As mentioned above, household furniture doesn’t hold any street value for the lender, so they’re rarely interested in repossessing them.
- Major Appliances – Unlike furniture, these do have street value. Thus, there are chances for you to get around half the amount that you still owe on them. It is likely to save more on older appliances, so in case your appliance is more than three years old, prospects of retaining them are high.
- Electronics – The probability of getting a good reaffirmation agreement on electronics is strong, especially if they are older than one year. You are not obliged to carry the items to the lender, so always ask him to come and pick the item in question. Since hauling away the item will cost him money, chances are that he won’t be interested in repossessing it unless the item is new.
You can learn about it by visiting https://www.recoverylawgroup.com/ or contacting 888-297-6203.