As a Northlake bankruptcy lawyer, I want my clients to get the best fresh start they can after a Chapter 7 bankruptcy filing. I do not want to see my clients obligated to pay on items that they don’t have a legal obligation to pay for. I will allow a reaffirmation agreement with regard to an auto because if a reaffirmation agreement is not signed on an auto, the auto lender has the ability to repossess the vehicle even if the debtor is current. So it is imperative that if a client wants to keep and to continue to pay for a financed vehicle, I must insist that they sign the reaffirmation agreement.
I don’t always get the reaffirmation agreement timely from the finance company in an individual bankruptcy case. In those instances, I need to contact the finance company and get a reaffirmation agreement forwarded over either by fax or e-mail or by regular mail and get it signed and executed before the case closes. If the case closes and goes to a discharge prior to the filing of a valid reaffirmation agreement, then you cannot open up the case and file a late reaffirmation agreement in this district. At that point, you just have to hope that the finance company doesn’t bring a repossession action or if they do, you might have the argument that they didn’t tender the reaffirmation agreement as they should have so they should be barred or stopped from bringing any kind of repossession action because some of that timing was the fault of themselves.
So in summary, reaffirmation agreements are a great way to keep an item, keep it going past the bankruptcy case and be subject to paying for it going forward. Reaffirmation agreements will improve your credit because the finance company will report that payment and that debt obligation to the credit bureaus. In an Illinois bankruptcy case, there is absolutely no reason to sign a reaffirmation agreement with regard to real estate, only towards personal property. Reaffirmation agreements have to be approved by the court and if there is a presumption of undue hardship, the court has the right to set a hearing whereby you as the debtor would have to come into court and explain to the court how you have the ability to make that payment going forward.