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Deciphering bankruptcy forms: Statement of Intentions

Filing for Chapter 7 bankruptcy in Washington, D.C., and elsewhere requires many forms. The Statement of Intentions form tells the court what you intend to do with your secured debts, which are car loans, mortgages, times shares, appliance loans and jewelry loans.

If looming vehicle repossession or foreclosure is what prompted you to file for bankruptcy protection, you may be afraid of signing away your assets. The Statement of Intentions form, however, does not create liability. If you state that you wish to keep your home or car, you may still change your mind later.

The Statement of Intentions form gives four options: surrender, redeem, reaffirm and other.

If you decide you no longer want to keep an $800 diamond engagement ring, you can state that you wish to surrender it. However, you must continue making payments until the lender physically possesses the ring.

If your asset is worth less than the value of the loan, you may pay off the retail market value of the asset or obtain a new loan for the retail market value. The asset must be movable, such as a car or furniture, and is not an option for homes or timeshares.

You reaffirm by signing a legally binding contract that says you will repay all or some of a debt that could otherwise be discharged through bankruptcy. This is sometimes required by car lenders, otherwise they will repossess the car after bankruptcy. Most of the time, a mortgage lender will not require reaffirmation.

And in the other category, if you wish to pursue loan modification, that can be stated in this field as well. If it is unsuccessful, you can still walk away. You can also state that you wish to continue making payments, in which case you may do so -- with the permission of the lender -- but will not see the payments on a credit report.

Source: Fox Business, "What Should You Say to Save House in Bankruptcy?" Justin Harelik, March 6, 2012

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