Reaffirm Your Debts And Keep Your Assets When Filing Chapter 7 in Chicago

It is common knowledge that chapter 13 bankruptcy is the best form of bankruptcy to ensure that you are able to keep your assets. However if you do not have enough of an income to file chapter 13 you can file chapter 7 bankruptcy and reaffirm your debts.

Chapter 7 bankruptcy is designed to discharge unsecured debts. An example of unsecured debt is a credit card, personal loans and medical debt. These are called unsecured because there is no property backing the loans. Many Chicago residents will file chapter 7 to liquidate their assets and be discharged of debt.

Chapter 7 bankruptcy becomes a lot less appealing when you have a car or home that you stand to lose through the liquidation process.

Cars and houses are examples of secured debts. This means that the property acts as collateral for the loan and the creditor knows they can get some or all of what is owed to them when you have defaulted by repossessing the property. 

If you have secured debt but are planning to file chapter 7 bankruptcy you want to discuss your situation with a Chicago bankruptcy attorney right away. Reaffirming your debts is an option for you but can be very complicated and not something simple to take on yourself.

When you reaffirm your debt while filing for bankruptcy you are committing to pay some or all of what is owed for those secured debts. Reaffirmation creates a new loan plan that both the creditor and you (the debtor) agree upon. Rather than giving up the asset to bankruptcy you are agreeing to continue to make payments towards it. Reaffirmation is also beneficial to the creditor because it protects them and they can still reposes the property if you default after bankruptcy has discharged your other debt.

Qualifying for chapter 13 bankruptcy requires a regular income to be able to make the necessary payments. If your income is low enough (below the median for your state) to qualify for chapter 7 bankruptcy and you believe you can make payments towards your car or home you may be able to save them and still discharge all other debts.

It is important to know that student loans, child support and most taxes will not be eligible for discharge. Your attorney will be able to define what exactly will be included and what will not.

Chang and Carlin Disclaimer
The content found on the Chang & Carlin site 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, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.