Individual debtors seeking relief from creditors through consumer bankruptcy are permitted by bankruptcy courts to file without an attorney. Although the bankruptcy courts strongly recommend hiring an attorney to assist in the very technical process of bankruptcy litigation, debtors may proceed in court by filing documents such as a petition, reaffirmation agreement and other pleadings without the assistance of counsel.
Secured and Unsecured Debts
Consumers seeking bankruptcy protection are saddled with a variety of debts, including student loans, tax liens, child support, credit card bills, mortgages and car loans. Although some of these debts cannot be discharged (canceled) in bankruptcy, such as child support and taxes, secured and unsecured debts are discharged at the end of your case. Unsecured debt is any consumer loans in which the lender's interests are not guaranteed by collateral. Unsecured loans include credit card debts, medical bills and unpaid rent. Secured loans are debts that are attached to physical property, such as your home mortgage or car loan. The security for repayment is guaranteed not only by a contractual promise to repay the lender, but also by a lien placed against the property.
Reaffirming Secured Debts
When a debtor is delinquent in paying a secured debt and files for bankruptcy, he is presented with the choice of surrendering property attached to secured debt or seeking to reaffirm the loan. This means the borrower must choose to give the car or home back to the bank or attempt to recommit to the contractual promise to repay the loan. If the debtor reaffirms the loan, then a reaffirmation agreement must be submitted to the court.
In reaffirming a debt, the borrower and any co-borrowers must complete a reaffirmation agreement to submit to the bankruptcy court. Unless special permission is granted by the bankruptcy judge, the agreement must be filed no later than 60 days after the initial meeting scheduled by the court between the debtor, the creditors and the bankruptcy trustee. The agreement must also be signed by the creditor and must include a completed reaffirmation cover sheet that is required by the rules of the local bankruptcy court.
Reaffirmation agreements filed by debtors who are not represented by counsel must be reviewed and approved by a bankruptcy court judge after an in-person hearing is held with the debtor and the trustee. The purpose of the hearing and court approval is to allow the court to determine whether the reaffirmation agreement is in the best interest of the debtor and whether the lender would permit the debtor to keep the collateral without signing the agreement. However, reaffirmation agreements involving mortgages are exempt from court approval if the debtor does not have a lawyer.