What is Reaffirmed Debt in a Bankruptcy Case?
When you are filing for Chapter 7 bankruptcy, you might come across information about reaffirmation or reaffirming secured debts. While you should be working with an experienced Oak Park bankruptcy attorney on your Chapter 7 bankruptcy case from the beginning to ensure that the process goes as smoothly as possible, you should certainly consult with a lawyer before you reaffirm any debt since a reaffirmation can affect your ability to get a fresh start financially once you receive a bankruptcy discharge. So, what does it mean to reaffirm debt in a Chapter 7 bankruptcy case?
Debtors Can Reaffirm Secured Debt in Order to Keep Property After a Chapter 7 Bankruptcy Discharge
In Chapter 7 bankruptcy cases, the goal is typically for the debtor to discharge all eligible debts in order to start anew financially. However, in some cases, the debtor might want to avoid having debt for certain secured property discharged—such as a motor vehicle or a home with a mortgage. In these cases, the debtor can enter into a reaffirmation agreement under U.S. bankruptcy law to reaffirm the debt. What this means is that the debtor will still owe this debt and be responsible for making appropriate payments once other eligible debts are discharged in the Chapter 7 bankruptcy case.
Canceling a Reaffirmation Agreement
What can you do if you enter into a reaffirmation agreement as part of your Chapter 7 bankruptcy case but you change your mind later on? Depending upon how much time has passed since you entered into the reaffirmation agreement, you may be able to rescind that agreement. Generally speaking, debtors in Illinois can rescind a reaffirmation agreement within 60 days after the reaffirmation agreement is filed, or at any point prior to your Chapter 7 bankruptcy discharge. However, rescinding a reaffirmation agreement can be complicated, and you will need to work with your attorney to ensure that you rescind the agreement in the correct manner according to the law so that you are not responsible for the debt.
Reaffirming Debt in a Chapter 7 Bankruptcy Case is Similar to Reaffirming Debt During Your Bankruptcy Case
Sometimes you will hear about debt being reaffirmed outside the context of a Chapter 7 bankruptcy case when a creditor or debt collector makes contact to collect on an old debt. Even if the statute of limitations has passed on collecting an old debt, or an old debt has been previously discharged in a Chapter 7 bankruptcy case, a debt collector might still call you in an attempt to recover some of the money owed. If you agree in any way to pay the debt—sometimes even implicitly as opposed to explicitly—you could be reaffirming the debt, making you legally responsible for paying that debt.
If you have any debts that have been discharged in bankruptcy or for which the statute of limitations has run out, you should avoid discussing the debt with a creditor or debt collector until you have spoken with a lawyer.
Contact Our Oak Park Bankruptcy Lawyers
Do you have questions about reaffirmation agreements in your Chapter 7 bankruptcy case? Our Oak Park bankruptcy attorneys can speak with you today. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
What is a Chapter 13 Cramdown?
Bankruptcy and the First-Time Homebuyer Tax Credit: What You Should Know
Debtors Can Reaffirm Secured Debt in Order to Keep Property After a Chapter 7 Bankruptcy Discharge
In Chapter 7 bankruptcy cases, the goal is typically for the debtor to discharge all eligible debts in order to start anew financially. However, in some cases, the debtor might want to avoid having debt for certain secured property discharged—such as a motor vehicle or a home with a mortgage. In these cases, the debtor can enter into a reaffirmation agreement under U.S. bankruptcy law to reaffirm the debt. What this means is that the debtor will still owe this debt and be responsible for making appropriate payments once other eligible debts are discharged in the Chapter 7 bankruptcy case.
Canceling a Reaffirmation Agreement
What can you do if you enter into a reaffirmation agreement as part of your Chapter 7 bankruptcy case but you change your mind later on? Depending upon how much time has passed since you entered into the reaffirmation agreement, you may be able to rescind that agreement. Generally speaking, debtors in Illinois can rescind a reaffirmation agreement within 60 days after the reaffirmation agreement is filed, or at any point prior to your Chapter 7 bankruptcy discharge. However, rescinding a reaffirmation agreement can be complicated, and you will need to work with your attorney to ensure that you rescind the agreement in the correct manner according to the law so that you are not responsible for the debt.
Reaffirming Debt in a Chapter 7 Bankruptcy Case is Similar to Reaffirming Debt During Your Bankruptcy Case
Sometimes you will hear about debt being reaffirmed outside the context of a Chapter 7 bankruptcy case when a creditor or debt collector makes contact to collect on an old debt. Even if the statute of limitations has passed on collecting an old debt, or an old debt has been previously discharged in a Chapter 7 bankruptcy case, a debt collector might still call you in an attempt to recover some of the money owed. If you agree in any way to pay the debt—sometimes even implicitly as opposed to explicitly—you could be reaffirming the debt, making you legally responsible for paying that debt.
If you have any debts that have been discharged in bankruptcy or for which the statute of limitations has run out, you should avoid discussing the debt with a creditor or debt collector until you have spoken with a lawyer.
Contact Our Oak Park Bankruptcy Lawyers
Do you have questions about reaffirmation agreements in your Chapter 7 bankruptcy case? Our Oak Park bankruptcy attorneys can speak with you today. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
What is a Chapter 13 Cramdown?
Bankruptcy and the First-Time Homebuyer Tax Credit: What You Should Know
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