Question

Suppose you file for personal bankruptcy under Ch. 7:

a. Will you be able to keep certain retirement funds and pensions? Explain.

b. Would your student loan be dischargeable ? Explain.

c. Why would a debtor enter into a reaffirmation agreement?

Answer 1

1.Under most circumstances you can keep your retirement accounts such as 401ks and IRAs , if you file for Ch7 bankcruptcy. However , for some accounts the protected amount may be capped.

2.If you have filed a Personal Bankruptcy under Ch.7 , Student loans are difficult but not impossible to discharge in bankcurptcy . To do so you must show that payement of the debt will impose an undue hardship on you and your dependants. If you wish that a student loan is discharged based on hardship it is not automatically determined in bankcruptcy process. You must file a petetion calle an adversary proceeding to get a determination.

3. A creditor to whom a debtor owes a debt can hav a "security interest" in property of the debtor, such as an automobile or appliance that is being purchased by the debtor over time through periodic payments. A security interest protects the creditor it the debtor cannot repay the debt and may give the creditor the right to take away and sell the property if the required payments are not made. Bankruptcy does no make these security interest property go away. If the debtor would like to keep the property he or she may have enter into reaffrimation agreement with the credtor that obligates the debtor to continue making th required payment during of after the bankrutcy case.It is generally not advisable for a debtor to bind himself to pay an otherwise dischareagble debt unless it is necessary to keep the property that is securing it.

Reaffirmation agreements are strictly voluntary. A debtor is not required to reaffirm any of his or her debt. If debtor signs reaffirmation agreement, the debtor agrees to pay a debt that otherwise mught be discharged in his or her bankcruptcy case. There may be other ways to renegotiate payments with creditors without entering into reaffirmation agreement. A credtior cannot compel you to enter into reaffirmation agreement.