There are both pros and cons to reaffirming a debt. Some of the pros include:

• You will keep the asset that is collateral for the debt. For example, if you reaffirm your car loan, you will keep your car.
• You may be able to negotiate more favorable terms for the debt. For example, you may be able to get a lower interest rate or a longer repayment term.
• Reaffirming a debt can help you rebuild your credit after bankruptcy. Timely payments will be reported on your credit report.

Some of the cons of reaffirming a debt include:

• You will be liable for the full amount of the debt, even if the value of the asset that is collateral for the debt has decreased. For example, if you reaffirm your car loan and the value of your car has decreased, you will still be liable for the full amount of the loan, even if you cannot sell your car for enough money to cover the loan.
• You may lose the asset that is collateral for the debt if you cannot make the payments. For example, if you reaffirm your car loan and you cannot make the payments, the lender may repossess your car.
• Reaffirming a debt can make it more difficult to get approved for new loans in the future.
• Even if the lender allows you to keep paying on the debt after bankruptcy, your payments will not be reported on your credit report, since the debt was discharged in the case.

Overall, whether or not to reaffirm a debt is a decision that should be made on a case-by-case basis. Generally, you would only reaffirm a secured debt, such as a car or a home. Absent very unique circumstances, it is generally not permissible to reaffirm an unsecured debt. You should carefully consider the pros and cons of reaffirming a debt before making a decision. Keep in mind, reaffirmation agreements are only available in Chapter 7 bankruptcy cases. Also, there is a limited time to change your mind, called a rescission, so talk to your lawyer if you have changed your mind.

Can you reaffirm a debt after discharge? Not in the Northern District of Illinois. Don’t let a creditor tell you that you need to reopen your case and file a reaffirmation. It can’t be done.

Finally, in the Northern District of Illinois, the court must approve a reaffirmation. They want to see that it is reasonable, necessary, and affordable. Always, talk to your lawyer for specific advice about a reaffirmation.

The post Should I reaffirm a debt in bankruptcy? Warning! appeared first on Chicago Bankruptcy Lawyer.

Get a Credit Report

One of the first things you should do after filing for bankruptcy is to obtain a copy of your credit report. This will allow you to see exactly what information is being reported about your credit history and to ensure that all of the information is accurate. You may also want to consider working with a credit counseling agency or financial advisor to help you develop a plan for rebuilding your credit. This may include creating a budget, paying your bills on time, and using credit responsibly.

Use Credit Cares Responsibly

In order to rebuild your credit, it is also important to use credit cards and loans responsibly. This means paying your bills on time, keeping your balances low, and only using credit when you need it. You may also want to consider applying for a secured credit card, which is a type of credit card that is backed by a deposit that you make with the lender. This can help you rebuild your credit and improve your credit score over time.

Make Better Financial Decisions

Ultimately, getting a fresh start after bankruptcy requires patience, discipline, and a commitment to making better financial decisions. By taking the right steps and working hard to rebuild your credit, you can regain financial stability and achieve your long-term financial goals. Remember that while bankruptcy can be a difficult and challenging experience, it can also provide the opportunity for a fresh start and a brighter financial future.

Free Bankruptcy Consultations

Contact us today to discuss your bankruptcy options and we can show you how you too can get a fresh start with bankruptcy. We offer Free Bankruptcy Consultations.

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