In Illinois and throughout the country mortgages do not have to be reaffirmed. In other words, the debtor can just continue to make the regular mortgage payment during and after the bankruptcy proceeding. As a Grayslake bankruptcy lawyer, I can advise that the mortgage company does not have the ability to foreclose for the failure to sign a reaffirmation agreement. Real estate is treated differently than personal property in terms of reaffirmation agreements. The Bankruptcy Code specifically states that real estate does not have to be reaffirmed. The debtor with real estate has the opportunity to make voluntary payments, also known as ride through, whereby the debtor continues to pay on the mortgage after the bankruptcy case is filed and the mortgage company will accept those payments and will not pursue any kind of foreclosure action provided the debtor is current.
With regard to vehicles and other items, if there is not a valued reaffirmation agreement filed by the debtor, then the lender does have the ability to repossess a vehicle even if the vehicle is current and/or repossess other items of personal property that are not reaffirmed. Thus, as a Chapter 7 bankruptcy attorney for the debtor, I strongly insist and require that if the debtor wants to keep a vehicle that they must sign a valid reaffirmation agreement. I have had cases in the past, shortly after the law changed where a person had actually signed a reaffirmation agreement and was current on the payments and yet the lender still repossessed the vehicle.
This was done because the judge did not approve the reaffirmation agreement and just kind of had it sitting there in limbo without either a thumbs up or a thumbs down as to its validity. Unfortunately, this lender took the opinion that if the agreement was not approved by the judge, then it was not a valid reaffirmation agreement. This is despite the fact that the debtor was current on the vehicle and had actually signed the reaffirmation agreement. This was an extreme case where a lender wanted the assurance that the reaffirmation agreement was actually approved by the court. I have only seen this happen once and I don’t really expect to see it again.
For more information with regarding to filing for debt relief, contact a local bankruptcy lawyer. That lawyer will know the local rules with regard to filing. You can also learn more by checking out the American Bankruptcy Institute web site. That organization deals with all facets of bankruptcy and is a great source for doing research.