Can I rescind or cancel my reaffirmation agreement after my chapter 7 is discharged or even closed? (Notice of Rescission Form)

Yes, you can, but the timing is tricky.

Short answer: You can rescind (cancel) it :

1. any time before discharge or

2. within 60 days of the agreement being filed with the court.

Long answer: According to the bankruptcy code, 11 U.S.C. 524(a)(3)(J):

You may rescind (cancel) your reaffirmation agreement at any time before the bankruptcy court enters a discharge order, or before the expiration of the 60-day period that begins on the date your reaffirmation agreement is filed with the court, whichever occurs later.

So let’s break it down. When you reaffirm a debt, you are re-assuming the debt. This means that your liability isn’t wiped out by the bk. If you stop making payments a year from now, they can repossess the car and sue you.

However, by reaffirming the debt, you get to keep the financed car and get that positive credit reporting.

Before Discharge: If you change your mind after reaffirming the debt, you can rescind (or cancel) it at any time before discharge. All you have to do is notify the creditor. That being said, I like to file a Notice of Rescission with the court as well. I am putting a text version of my Notice of Rescission below. I also mail and email a copy to the secured creditor.

After Discharge: The bk code gives you 60 days from the date your reaffirmation agreement was filed with the court. This is NOT 60 days from when you signed it. This is 60 days from when the creditor got around to filing it. Use that same Notice of Rescission.

Case Closed: A Client contacted me today and said that wants to give up her reaffirmed truck. Her discharge was entered 2 weeks ago, and her case closed out 5 days ago. Now she changes her mind! Officially, I don’t have to file that Notice of Rescission, but I’m going to do so and send a letter to the creditor.

Oral Notice????: Technically, there is no required means of giving notice to the creditor. Oral notice is actually sufficient (just telling them over the phone). That being said, I like to keep things in writing. In law school they taught us that: “If it’s not in writing, it didn’t happen.”

Just remember that if you do rescind your reaffirmation agreement, they will want the car back soon. They can even repossess it that night. However, they’ll probably contact you to arrange a time to pick it up.

Here is a copy of my poorly drafted official “Notice of Rescission.”

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

In re:

DEBTOR
Debtor.

Bankruptcy No. XX-XXXXX

Chapter 7 Hon. WTT

NOTICE OF RESCISSION OF REAFFIRMATION AGREEMENT WITH RC WILLEY FINANCIAL SERVICES

Debtor gives notice that she is rescinding the Reaffirmation Agreement (Docket 10) recently filed between her and RC Willey Financial Services.
Dated this 30th day of July, 2019.

/s/ Robert S. Payne Attorney for Debtor

Certificate of Service

I certify that I mailed a copy of the foregoing to RC Willey Financial Services at POB 65320, Salt Lake City, UT 84165-0320

I wrote an older article about this (6 years ago) here: I already signed my reaffirmation agreement, but I changed my mind. Can I cancel/rescind that agreement?https://robertspaynelaw.com/myutahbankruptcyblog/2014/03/27/i-already-signed-my-reaffirmation-agreement-but-i-changed-my-mind-can-i-cancelrescind-that-agreement/