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Reaffirming debt under Chapter 7

Mississippi debtors may decide to file for Chapter 7 bankruptcy in order to get a fresh financial start. Those approved for Chapter 7 bankruptcy will be able to stop wage garnishment and other collection activities during the bankruptcy process and will generally be able to discharge their debts in exchange for the liquidation of their non-exempt property. In certain cases, debtors may decide to reaffirm a debt; there are several Bankruptcy Code requirements for doing so.

Some creditors may still be able to seize property even after a discharge is granted. Debtors who wish to keep certain property may decide to reaffirm their debt for that property. By reaffirming the debt, the debtor agrees to remain liable for the amount owed and the creditor allows them to keep it in exchange for their agreement to make payments on the property.

According to the Bankruptcy Code, a signed reaffirmation agreement must be filed with the court by the debtor before the discharge is entered. The agreement must contain several details, including the amount of debt being reaffirmed and how it is calculated. Debtors must also disclose their income and expenses to show that they are able to pay off the reaffirmed debt. There is a presumption of undue hardship for debtors who are unable to repay the debt according to their income and expenses disclosures and the court may decide not to allow the reaffirmation.

The bankruptcy judge must approve the reaffirmation agreement unless the debtor is represented by an attorney. Those represented by an attorney must be advised of the legal effects and consequences of their reaffirmation agreement and must give full and voluntary consent to the agreement as well as certification that the reaffirmed debt will not create an undue hardship for them. Some debts, such as alimony and child support, will not be discharged in Chapter 7 bankruptcy and debtors will continue to be liable for them even after their cases have concluded.

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