If you want to keep property that is subject to a lien, you must enter a reaffirmation agreement, otherwise the court will sell the property and apply the proceeds to what you owe. A reaffirmation agreement allows you to keep the property and continue to make payments. If you sign a reaffirmation agreement and later default on your payments, the lender can still repossess the property and sue you for any deficiency balance. The only benefit to reaffirming a debt is that the payments made after reaffirmation are reflected on your credit report, which will help you reestablish your credit.

Most secured lenders will continue to accept your monthly payments and allow you to keep the property even if you haven’t signed a reaffirmation agreement (known as “retain and pay”).  Some lenders say they will repossess vehicles unless the debts are reaffirmed. Other lenders feel it is better to receive monthly payments under the “retain and pay” option rather than lose money by selling repossessed vehicles at auction prices. It is possible, however, that just when you think your lender has decided to continue to accept your payments, you find one day that your vehicle has been repossessed.  Consider speaking to an attorney before entering into any agreement.