Reaffirmation Agreement-Things You Need To Know

The Law Offices of Chang and Carlin guide individuals and families through their financial struggles, helping them make a fresh start through Chapter 7 and Chapter 13 Bankruptcy.

Bankruptcy is a powerful tool which, if used correctly, can help you recover from financial crises. However, there are many things involved in the bankruptcy process which you need to understand. A good bankruptcy attorney in Chicago will not just help you sail through the bankruptcy process, but will also answer all your questions pertaining to bankruptcy. So, here is some information on a ‘Reaffirmation Agreement’, brought to you exclusively by Chang and Carlin, LLP.

What is a Reaffirmation Agreement?

In a Chapter 7 bankruptcy, a reaffirmation agreement is basically a contract between you and your creditor that states that you agree to treat that specific debt as if you have never filed bankruptcy.

Why people sign reaffirmation agreement?

Many people who file bankruptcy are under the misconception that if they reaffirm a debt, that debt is not listed in the bankruptcy petition. However, the truth is that you must list all of your creditors in your bankruptcy case or you will be in violation of the bankruptcy laws.

What happens if you sign reaffirmation agreement and then fail to pay?

If you sign a reaffirmation agreement and then fail to pay that creditor, they can sue you and garnish your wages. Chang and Carlin, LLP’s experienced foreclosure attorneys in Chicago suggest that you never sign a reaffirmation agreement unless you are extremely confident you will be able to make the future payments.

When should you avoid filing a reaffirmation agreement?

One of the benefits of a Chapter 7 bankruptcy, is the ability to keep (or "reaffirm") debts secured by property the debtor needs for his or her fresh start.  Typically, clients need their vehicle and house and reaffirming the loans on those items seems like the right thing to do. However, there are certain cases when you should not go for a reaffirmation agreement-

·        If there is a 2nd mortgage;

·        If a client is self-employed or has fluctuating pay; or

·        If the property has little or negative equity.

Having the proper knowledge of bankruptcy and related procedures will not only save your financial future, but can also save you from harassment and embarrassment. For more similar useful information, or to schedule a free initial legal consultation with an experienced bankruptcy or real estate attorney in  Chicago, call Chang and Carlin, LLP today or Request a Free No Obligation Bankruptcy Filing Consultation Today.

Disclaimer: The content provided by Chang and Carlin, LLP is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Foreclosure services, or Real Estate legal services, call our law firm at 1-866-790-8601 for a Free Legal Evaluation. Chang and Carlin, LLP serves clients in Chicago, Schaumburg, Joliet, and Warrenville.