Question Aout Reaffirmaton Agreement...
My parents filed bankruptcy at the first of the month. Today they got a letter from "Best Buy" offering to reaffirm the agreement before the final discharge was issued in two weeks. The agreement offered 3 options for the reaffirmation:1) Resume the payments 2) Give up the collateral and pay the difference in value 3) Pay a lump sum. Also there is a clause in the agreement that says by signing the agreement that my parents give up ALL of their bankruptcy protection, not just the protection against "Best Buy". Their attorney advised them not to sign the agreement, saying that since the account was listed as unsecured and "Best Buy" only sent in an amount and didn't list the actual merchandise when the papers went to the court, that there shouldn't be a way for "Best Buy" to get anything. He also said that this sort of thing is normal in a post bankruptcy and unless there is personal property listed for the collateral (land, cars, etc...) these store accounts are almost always a "unsecured" note, especially electronics like DVDs and CD-- which have no resale value. Is their attorney right?
Answer:
I'd emphasize the listening to attorney part. In a desire to "be honest", an older generation is I think particularly susceptible to wishful belief that they'll be okay as long as they do "what is fair" or "what is right". They're going to want to be very, VERY sure that nothing they do, unintendedly un-does their bankruptcy protection on a legal footing. If you want more details on this area, you should check out nolo.com's advice on bankruptcy, or Amazon.com's better recommended BK titles. You'll find numerous warnings against reaffirmations. There are many first hand accounts out there of retailers showing up at BK hearings and applying the proverbial thumbscrews, with intimidated and ashamed debtors signing re-affirmations. There are as many stories of refusal to reaffirm where the retailer never bothers to repossess or otherwise follow through with their threatened demand of the item, knowing its depreciated value is not worth the effort.
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