I do not recommend that you file bankruptcy yourself. There is just too much information to know in a bankruptcy filing. Instead, I would recommend a Dolton bankruptcy lawyer. For example, clients often wonder why they must include every bill they owe, especially when it’s their intention to keep an item like a house or a car and continue to pay for it. In the abstract, it seems silly to have to include bills that the client isn’t going to bankrupt. Not surprisingly, this displays a fundamental misunderstanding of the bankruptcy process. When a client declares bankruptcy, she is asking for relief from their debts. In exchange for granting this relief, the Bankruptcy Courts, using the Bankruptcy Code, expect the debtor to play by its rules. Bankruptcy basics and the bankruptcy Code state that a debtor shall file a list of creditors. It’s not a mere suggestion or request. This is the first and most important part of the debtor’s obligations that the Bankruptcy Court expects to be fulfilled in exchange for the discharge of the debtor’s financial responsibilities.
That being said, just because a debt must be disclosed in the debtor’s bankruptcy schedules don’t mean that the debtor can’t voluntarily pay her debts. A reaffirmation agreement is a voluntary agreement entered into between a debtor and a creditor that allows the debtor to maintain possession of an item in exchange for continuing to make payments on that item. Typically, reaffirmation agreements are reached for cars and furniture. They can be used for any kind of debt, including jewelry, camping equipment, fur coats, boats, jet skis, anything. Such agreements may even be entered into for personal debts owed to friends or family members. Likewise, a reaffirmation agreement may be used to avoid bankruptcy litigation threatened by a creditor. Your Chapter 7 bankruptcy attorney will help you decipher the repayment terms and the interest rate of the agreement.
Reaffirmation agreements act to bind the debtor to the debt once again; in effect, they take the debt out of the bankruptcy as if it were never included in the bankruptcy. The terms of this agreement are the same as those into which the debtor originally entered. Debtors must be aware that this means that if they should default under the new agreement, they will be held liable for the unpaid balance and any attorney’s fees the creditor incurs in trying to collect its debt; these amounts are not covered by their bankruptcy discharge.
Curiously, debtors who want to keep their houses and pay their mortgages will do so without benefit of a reaffirmation agreement. In most states, mortgage companies do not require reaffirmation agreements in addition to payments in order for debtors to keep their houses. Car companies almost always require reaffirmation agreements; mortgage companies seldom do. If, however, a debtor does not pay the regular mortgage payments, the mortgage company will initiate foreclosure proceedings. But should the mortgage company finish their foreclosure, the only ramification for the debtor is that she will lose her house; she will not be liable for a deficiency judgment because she did not reaffirm her debt. An Illinois bankruptcy attorney will caution you against reaffirming any type of debt unless you can show an ability to repay the debt without a hardship.