Reaffirming Debts

Experienced Reaffirmation Agreements in Southern Illinois

Sometimes, people who file for bankruptcy wish to reaffirm certain debts in order to hold onto property that might be otherwise repossessed. Typically, debt reaffirmation happens when individuals want to keep their cars or other vehicles. Transportation is often viewed as a necessity, and by reaffirming the debt you owe on your automobile, you can keep it as long as you continue to make the payments.

When you sign a reaffirmation agreement with a creditor, you are essentially agreeing that the debt will not be discharged in your bankruptcy. The contract to the car is automatically broken in the bankruptcy and a debt reaffirmation will create a new contract that will make you liable for the remaining debt. At the law firm of Lathram & Herbert, LLP, in Collinsville, Illinois, and Bankruptcy Advocates in Carbondale, Illinois, our bankruptcy attorneys advise clients on debt reaffirmation and if it is a wise choice for their situation.

Creditors Encourage Debt Reaffirmation

As a general rule, debt affirmation is rarely a good idea. Creditors are very happy when their debtors agree to reaffirm their debt, as it means that they will generally be paid more than they would be in a bankruptcy. The car lien passes through the bankruptcy unaffected and the creditor may still repossess the car if you fail to make payments on it. Unfortunately, reaffirmation agreements can limit the effectiveness of a bankruptcy and can keep you in debt even after the bankruptcy process is finished.

If you want to reaffirm a debt in bankruptcy, you will have to get the reaffirmation agreement approved by the bankruptcy court. Bankruptcy courts are more likely to approve a request to reaffirm an auto loan due to the need for reliable transportation. For other debts, especially purchases such as a boat or other non-essential items, reaffirmation agreements may not be approved by the court. Even in the case of a car loan, there may be less expensive transportation options that make reaffirmation unnecessary.

If you are considering a reaffirmation agreement, you need to contact an experienced bankruptcy lawyer who can advise you on the best options for your situation. When debt reaffirmation makes sense, we will provide representation and help you to get the court's approval. When debt reaffirmation is not in your best interest, we will provide an honest assessment of your case.

Email the Carbondale office or call 618 549 9800

Email the Collinsville office or call 618 623 4311

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