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.

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Answer: If you are current and maintain the payments and insurance, you should be fine and can keep the vehicle when a cosigner surrenders their interest in the vehicle.

In other cases, where you would be the debtor in the bankruptcy, and are cosigned on someone else’s car, you can walk away from the debt, discharging it, leaving the payments to the cosigner.

Alternatively, if the vehicle is yours, and you file bankruptcy, you can continue to make payments on the vehicle and reaffirm the debt, thereby protecting your cosigner. Remember, a cosigner is always liable for the debt, regardless of who has the asset.

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Answer:
Yes, you can rescind a reaffirmation within 60 days of signing it, or the date of discharge, whichever is later. The creditor would then have the right to collect the collateral, then liquidate it to recoup whatever they can out of the asset, with any remaining balance being discharged through the bankruptcy case.

The bankruptcy should trump the payment history. Occasionally, they will mis-report it on the report, because you did sign the reaffirmation originally. You can usually contact the credit bureau to do an investigation about the mistake, and they have a duty to fix any errors accordingly, giving you a copy of the ‘clean’ report once fixed.

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The post Bankruptcy Exemptions for retirement accounts in IL, reaffirming car lease and home appeared first on Chicago Bankruptcy Lawyer.

Here is a recent question I received:

Question:
I filed Chapter 7 Bankruptcy last year and managed to hold on to my home. I checked a box in the bankruptcy paperwork stating that I wanted to hold on to my residency. I am falling behind on my payments and want this debt to be included on my bankruptcy. Is this a reaffirmation agreement by the Court. Or is there more to it?

Answer:
A reaffirmation is a document signed by the creditor, the debtor, and usually the debtor’s attorney. This states that the debtor will continue payments on the debt after bankruptcy. It keeps the debtor on the hook, thus allowing the debtor to keep the asset. This document is filed with the court, and is usually reviewed by the court to verify that there is no undue hardship on the debtor. It sounds like you are referring to your Statement of Intention, that you intend to sign a reaffirmation agreement to keep the home. If you do not sign a reaffirmation, you are not liable for the debt, and the creditor can take the steps necessary to collect the collateral back (here, foreclose.) Check with your lawyer to confirm if you have signed a reaffirmation agreement with the lender.

The post Reaffirming a mortgage appeared first on Chicago Bankruptcy Lawyer.

“Do I choose which debts I want to include in my bankruptcy or does the trustee do this? I have a bank loan for my truck which I pay on time and I want to keep my truck and keep making payments. Do I have to include this loan in my paperwork for a bankruptcy? What happens if I don’t include it?”

Answer: All debts must be listed in the bankruptcy petition. You can select to ‘reaffirm’ certain debts. Most chapter 7 consumers reaffirm financed items -cars, houses, jewelry, furniture and electronics. You can usually keep the asset by agreeing to keep paying for it. Now, your budget has to show that you can afford the payments, otherwise the judge could request that you prove how you can afford the payments if your budget shows you cannot.

Similarly, you must list all debts in a bankruptcy case, technically even small personal debts, such as the $10 you owe your Aunt Sue should be listed too! Otherwise, it would be bankruptcy fraud if you intentionally omit a creditor from a bankruptcy petition.

Amendments: if you find out that you inadvertently left a debt out of your bankruptcy filing, perhaps an old medical bill from 4 years ago, don’t fret. You can always amend to include that bill in your case. If you do not, it will not be discharged under the bankruptcy code under BAPCPA. The court charges a nominal fee to amend to add another debt if you case is still open.

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