Mortgage Reaffirmation Agreements in Chapter 7

Author: Joe Pioletti Posted on: . Filed in: Uncategorized.

Another change that occurred in bankruptcy law with the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was the use of reaffirmation agreements. This is another item that creditors lobbied for heavily because reaffirmation agreements benefit creditors far more than they benefit debtors. A debtor should never enter a reaffirmation agreement without first discussing the pros and cons with the debtor’s attorney, especially a mortgage reaffirmation agreement in a Chapter 7 case.


Are you struggling to pay debts? Do you run out of money at the end of each month before you finish paying your bills? If so, bankruptcy may be the answer to your debt problems. The bankruptcy attorneys of Pioletti & Pioletti can answer your bankruptcy questions and discuss whether a bankruptcy filing is in your best interest. Contact our office at 309-938-4838 to schedule your free consultation.


What is a Reaffirmation Agreement?


A reaffirmation agreement is a legally binding contract between you and a creditor whereby you agree to pay back the debt as if the bankruptcy case was never filed. Reaffirmation agreements are typically used when a debtor wants to keep an asset that has been financed or has been used as collateral for a loan such as a vehicle, boat, or motorcycle. There are pros and cons to signing a reaffirmation agreement and those pros and cons may change depending on the debtor’s specific circumstances.


A debtor should discuss whether to sign a reaffirmation agreement with his or her lawyer to determine if this is in the debtor’s best interest for the long-term. Once a debtor enters into a reaffirmation agreement with a creditor, the debtor is legally liable for the repayment of the debt. If the debtor defaults on the debt, the creditor can repossess the collateral and pursue all state actions to collect the debt, including but not limited to, filing a collection lawsuit to collect any deficiency amount.


By law, if a creditor demands a reaffirmation agreement, the debtor must either surrender the asset or sign the reaffirmation agreement. However, some creditors do not require the debtor to provide a reaffirmation agreement if the debtor is current on the payments and remains current on the payments. This does not apply to mortgages. A mortgage lender cannot force a debtor to sign a reaffirmation agreement to keep the property. The debtor may keep the real property provided that the debtor continues to make timely mortgage payments. In some cases, there could be a reason why a debtor would want to sign a mortgage reaffirmation agreement; however, the negatives usually outweigh the positives.


Contact Our Office for a Consultation with an Experienced Illinois Bankruptcy Attorney


The bankruptcy lawyers of Pioletti & Pioletti want to help you relieve the stress, frustration, and anxiety you are experiencing due to your debt problems. We represent clients throughout central Illinois including residents of Eureka, Bloomington McLean, Woodford, Tazewell, and Peoria counties by providing compassionate, competent legal services. Contact our office at 309-938-4838 to schedule your free consultation.

Joe Pioletti

Joe Pioletti

Attorney Joe C. Pioletti was born and raised in Eureka, IL.Joe received his Bachelor of Arts Degree in Business Management from Eureka College where he also minored in Spanish.Joe then received his Juris Doctor from Southern Illinois University School of Law.While in law school Joe worked in the Domestic Violence Advocacy Clinic and was a three-time recipient of the Charter Class Campaign for Academic Excellence Scholarship.
Joe Pioletti