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A reaffirmation agreement is entered between the Petitioner in Bankruptcy/borrower and a secured lender prior to a discharge in Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.  A reaffirmation Agreement is signed by the Debtor and Lender and filed with the Bankruptcy Court and most importantly waives discharge of the mortgage or otherwise secured debt.

 The primary advantage of reaffirming a mortgage is that timely and regular monthly payments will be reported to the credit reporting agencies (Equifax, Transunion and Experian), thus accelerating an increase in credit score(s) after a bankruptcy discharge.

 However, a homeowner that did not reaffirm their mortgage and finds themself in an unforeseeable circumstance after bankruptcy, such as, needing to move quickly, a sudden drop in income, increase in expenses or medical reasons may vacate the subject real estate without any personal financial responsibility.  Reason being, since the debt was not reaffirmed, the Lender/Mortgagee may not continue to report the debt to the credit reporting agencies as delinquent.  Further, any deficiency from a judicial sale of the subject real estate would not be the financial responsibility of the homeowner and deemed to be discharged through bankruptcy because the debt was not “reaffirmed” through the bankruptcy proceeding.

 Before signing a reaffirmation agreement, you should consult with your bankruptcy counsel regarding your situation to determine the best option for you.

To speak to an attorney at Sadek and Cooper Law Offices regarding your situation and the best options available to you, please contact one of our offices listed below.

CENTER CITY PHILADELPHIA: 1315 Walnut Street, #502 Phila., PA 19107                           215-545-0008
NORTHEAST PHILADELPHIA: 2375 Woodward Street, #105 Phila., PA 19115                       215-545-0009
DELAWARE COUNTY OFFICE: 1489 Baltimore Pike, #218, Springfield, PA 19064               610-432-3111
BUCKS COUNTY OFFICE: 1609 Woodbourne Road, Suite 203B, Levittown, PA 19057            215-545-1055
NEW JERSEY OFFICE: 302 Washington Avenue, Suite 101 West, Moorestown, NJ 08057  215-545-0008