What you should know about reaffirming debt

Filing for Chapter 7 bankruptcy can be a complicated and emotional process, especially when you are faced with decisions that may seem overwhelming. Although people who file for this type of bankruptcy are able to wipe out much of their debt, they run the risk of having some of their property and/or possessions reclaimed by a trustee who is appointed to the case.  There are ways, however, of keeping some of your property, such as your home or vehicles, through loan reaffirmation in Illinois.

Depending on the circumstances surrounding your case, you may be able to work with the creditor in order to extend the terms of your loan, even while you’re going through the bankruptcy process, according to U.S. Courts. When you reaffirm a debt, you agree to work with the creditor and continue making payments on your loan in order to keep your property. For example, if you wish to keep your vehicle during a bankruptcy, you may reaffirm the loan with the financial institution and make arrangements to keep paying, despite your impending bankruptcy. In some cases, the creditor may lower your monthly payments or decrease your interest rate as a way to help you.

It is important to keep in mind that when you reaffirm a loan, the debt will not be discharged and you are still fully responsible for paying off the terms of the loan. In order to be approved for debt affirmation, you must submit a comprehensive statement of your income and expenses showing that you have enough money to make the reaffirmed loan payments each month.  

This information is intended to educate and should not be taken as legal advice.

 

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