Should I Reaffirm Secured Debt in a Chapter 7 Bankruptcy Case?

If you are planning to file for Chapter 7 bankruptcy, it is important to understand that this is a liquidation bankruptcy. Accordingly, all of your non-exempt property will be liquidated in order to repay creditors, and you will receive a discharge of all eligible debts at the end of the bankruptcy process. The time from filing to discharge usually takes approximately four to six months, making the Chapter 7 bankruptcy process quite fast, especially in comparison with Chapter 13 bankruptcy, which requires a repayment plan over the course of three to five years. While many debtors want to file for Chapter 7 bankruptcy in order to get a fresh start, there are some situations in which a debtor might not want to give up secured property or receive a discharge because the debtor wants to keep that property and continue to make payments on it.

Is this type of arrangement possible in a Chapter 7 bankruptcy case? For example, if you have an auto loan and want to keep the car and continue to make payments to the lender after you receive a discharge in your Chapter 7 bankruptcy, will the bankruptcy court allow you to do this? The process of reaffirmation can allow you to retain certain assets secured by collateral in a Chapter 7 bankruptcy case. What will you need in order to enter into a reaffirmation agreement?

You Must be Current on Your Loan

First, in order to enter into a reaffirmation agreement, you must be current on the loan. For example, if you want to enter into a reaffirmation agreement with an auto lender so that you can keep your vehicle and continue to make payments on it after your bankruptcy discharge, you must be current on your auto loan.

Equity in the Asset Must be Exempt

Any of the equity you have in the asset for which you want to enter into an affirmation agreement must be exempt. If you are thinking about a reaffirmation agreement for a car, for example, you should know that Illinois has a motor vehicle exemption that allows you to protect up to $2,400 of equity in a motor vehicle. If you have equity in the asset beyond the exemption amount, and you cannot use a wildcard exemption, the bankruptcy trustee will liquidate the non-exempt equity in the asset.

Bankruptcy Court Will Need to Approve the Reaffirmation Agreement

The court will need to approve the reaffirmation agreement after considering your financial circumstances and the likelihood of your ability to continue paying the loan after your bankruptcy case is closed.

You Believe You Can Remain Current on the Loan

Finally, you should only enter into a reaffirmation agreement if you believe you can remain current on the loan after your bankruptcy discharge, and if you want to do so.

Contact an Experienced Oak Park Bankruptcy Lawyers

If you have any questions about reaffirmation agreements in Chapter 7 bankruptcy cases, one of our experienced Oak Park bankruptcy attorneys can speak with you today. Our firm can assist you throughout your Chapter 7 bankruptcy case, and we can discuss the benefits and advantages of reaffirmation agreements with you. Contact the Emerson Law Firm to learn more about how we can help with your personal bankruptcy case.


See Related Blog Posts:

Things to Know ABout Consumer Bankruptcy in the New Year

What are the Differences Between Debt Settlement and Bankruptcy?

Comments

Post a Comment

Popular posts from this blog

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more
Read more

Younger Parents Need an Estate Plan

It is critical for younger parents to have an estate plan, even if they know they are healthy and do not anticipate that anything will happen in the near future. Much too often, younger parents assume that they can wait until they are older to consider estate planning or until there is a health-related reason to begin the estate planning process. Yet estate planning is critically important for parents who have minor children. While estate planning is important for adults of all ages, it can allow parents to make important decisions about who will care for their children in the event that they become unable to do so themselves. Our Oak Park estate planning lawyers can explain in more detail. Naming a Guardian for Your Minor Children in Your Will Most importantly for younger parents, making a will allows you to name a guardian who can care for your child in the event of your unexpected death. Nobody anticipates a deadly accident or a sudden situation in which there is a need for another
Read more