Your Rights When Filing for Bankruptcy

Bankruptcy laws are complicated, and it’s often difficult to tell what your rights are when filing for bankruptcy, and what has to be done under law. Consumers do have some rights when filing for personal bankruptcy. Understanding these rights can help you make informed decisions about your financial future.

When you file for bankruptcy, you are offered the opportunity to reaffirm your debts. When you reaffirm a debt, you may be able to change the terms, including the payment amount, length of loan, interest rate, and amount owed. If you agree to a reaffirmation, you need to continue making the agreed-upon payments, and the loan is not discharged.

However, you do not need to reaffirm anything. Keep this in mind when filing for bankruptcy, because it’s often not in your best interest to reaffirm credit cards and other kinds of unsecured debt.

When reaffirming, you do not have to reaffirm under the same terms—you should negotiate for better terms with the lender before deciding to reaffirm. In addition, if you choose to change your mind after you reaffirm, you can do so up to 60-days after it’s filed with the bankruptcy courts. You must write a letter to the creditor, and they are required to return any money you’ve paid under the reaffirmation agreement.

When you file for bankruptcy, you may also try to redeem your collateral on a secured debt. When you redeem your collateral, you pay your creditors a lump sum of money for the amount the item is worth, rather than what you owe. This can be beneficial for items that depreciate quickly.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.