A reaffirmation agreement is a secondary contract keeping you liable on secured property. As a Chicago bankruptcy lawyer, I have had questions over the years of whether or not a persons case can be reopened to allow for a reaffirmation agreement. A reaffirmation agreement is voluntary for both the creditor and debtor. The problem usually arises when the debtor is trying to get a loan modification after their Chapter 7 bankruptcy. If they didn't reaffirm the bank will tell them that they cannot offer the loan modification. In this district, a bankruptcy cannot be reopened to enter a reaffirmation agreement that was entered into after the discharge.

However, this information is incorrect on the banks end. Since a loan modification would be considered a post petition debt then the person would in fact be liable on the mortgage and note in most cases. A reaffirmation agreement is not necessary to keep a property out foreclosure, because there must be a default. If there is no default then the lender cannot foreclose whether or not the Debtor reaffirmed. The risk is that if a client signs a reaffirmation for a mortgage then they are liable on the mortgage and note and it will survive the bankruptcy.

For a client to keep a vehicle after discharge the client must enter into a reaffirmation agreement prior to the discharge, and also the reaffirmation agreement must be negotiated prior to the entry of the discharge. The bankruptcy court will not allow a debtor to reopen a Chapter 7 bankruptcy to enter an agreement that is entered into after the bankruptcy discharge. I am an experienced Chicago bankruptcy attorney who has helped numerous clients get out of debt. Please call my office for a free consultation at 312-489-8182.

Marc