When a Bradley County, Tennessee resident has to file bankruptcy, they often have several debts secured by collateral, or property the debtor owns but promises the bank or financing company can have if the debtor does not make good on his or her loans.
As previous posts on this blog have discussed, from a long term perspective a Chapter 7 bankruptcy will not protect a debtor's collateral from getting taken if they have fallen behind in their payments. Assuming they are not behind in their payments, though, they may get what is called a reaffirmation agreement from the creditor.
It is not always bad to sign these agreements and, in some cases, one may have to sign it or face the bank calling for a loan due early. However, it is important to remember that, by signing this agreement, a debtor is giving up the right to have the debt discharged in bankruptcy. In other words, they are responsible for the whole outstanding debt and will be for several years, until they are legally allowed to file bankruptcy again.
While this setup may be all fine and good if the debtor has better financial fortunes, if they should run into further difficulties, then the creditor can not only take back the collateral but also hold the debtors personally responsible for any shortfall and can even take steps like garnishing the debtor's wages.
Cleveland residents should only sign a reaffirmation agreement after careful reflection, and it is also generally a good idea to listen to the advice of one's bankruptcy attorney in such matters.