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.

Case law history:

Thompson v. General Motors Acceptance Corp., 566 F.3d 699 (7th Cir. 2009), the Seventh Circuit held that if the city holds a vehicle in impound, that is an exercise of control which violates the automatic stay under Section 362(a)(3).

 In re Avila, 566 B.R. 558 (Bankr. N.D. Ill. 2017) Judge Cassling held that a possessory lien on a vehicle falls within the exception to the automatic stay under Section 362(b)(3) allowing the city to maintain possession and essentially securing the debt owed to the city to the vehicle, allowing for the city to be paid as a secured claim.

In re Walker, 17-33957 (Bankr. N.D. Ill. Dec. 20, 2017) Judge Schmetterer said the city must return impounded cars, but their lien remains and they would be allowed to file an emergency motion to modify the automatic stay and /or request adequate protection.

Other jurisdictions remain split, so hopefully the US Supreme Court will choose a case and weigh in as well.   Time will tell.

The post Can I file chapter 13 to get back my car that the City of Chicago impounded? appeared first on Chicago Bankruptcy Lawyer.

So, I figure I’ll sell the benefits of bankruptcy, with Y is for YOU DID IT!
You completed the bankruptcy case.  3 months for chapter 7, and 3 to 5 years for most chapter 13 bankruptcy cases.    So, now what?

It is a good idea to check your credit report a few months after bankruptcy.  This is a new service we are providing for interested clients.  We’ll help to make sure all items are being properly reported.
You worked hard and paid a lot of money to get your credit back on track, so make sure it’s being done correctly.

You should see an increase in your credit score after bankruptcy as well.  My research shows that most credit scores are predicted to jump up 50-100 points in the first year after bankruptcy.  This assumes the debtor doesn’t go crazy and apply for every offer they see!  If the debtor stays on track, pays all of their bills on time, they should see an increase.  

Don’t hesitate to take new debt, but only if you need it.  You’ll get bombarded from tons of companies who gather your info from the bankruptcy filing and send you offers of new credit. Be smart, throw most in the trash.  You’ll notice huge interest rates and tempting offers that aren’t as good once you start reading the small print.

Take out a small credit card.  Use $50 each month on it. But pay off that $50 each month in full, on time as well. That will help your credit score for sure.

My clients are getting credit card and loan offers the first month after the case.  They are getting car notes the first month out of bankruptcy in Chicago as well.  Watch those interest rates and long car notes – 6, 7 years! Yikes!  My clients in the Chicago area who file bankruptcy are also getting mortgages as well within a few years out of bankruptcy.  

Nothing is set in stone, so feel free to seek out the credit, but only if you need it.  Keep your payment history clean, pay your bills on time.  That can take a few years before this has a major positive impact on your credit score, but every month counts.

Make a budget for yourself.  Be honest with yourself as well.  You had to take 2 counseling classes during the bankruptcy process,  use what they have provided to help keep you on track to financial freedom.

Don’t forget, your attorney is a great tool as well to use, to help with issues you may be having.  They are a great source of referrals too, and have many vendors who are bankruptcy friendly if you need a car, a credit card, loan etc.  

Congratulations, you are out of debt and have a fresh start!
www.leederslaw.com
www.chicagobankruptcynetwork.com
www.cookcountybankruptcy.com

The post Y is for You Did It! You got a bankruptcy discharge! appeared first on Chicago Bankruptcy Lawyer.