Default On Reaffirmation Agreement

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Insolvency claimants must now enter into assertive agreements on secured debts for personal property. This means that the cancellation of insolvency does not apply to the new debt and the declarant remains personally liable for the debt, including a possible deficit if it is in arrears in subsequent payments. Reaffirmations serve to protect the secured creditor. Bankruptcy law does not require new declarations for debts secured by real estate, such as your mortgage. If you have a second mortgage – a home loan or line of credit – you have the same problems. The lender can make a seizure, and you run a much greater risk for a default action. If the auction isn`t enough money to pay off both the first and second mortgages, you still owe money to the second mortgage holder. .

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