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Reaffirmation Debt

Chicago, IL |

I filed a chapter 7 and kept my House, and a rental property& my car.My Lawyer only did a reaffirmation on my my car. My house & rental property is volunter payments was this a good Decions? I'm trying to get a fresh start. And build my credit back. What should I do if the Mort comp not reporting my Payments?I was never late with my Mort comps in 15yrs.It;s was other debt that got out of hand.

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Attorney answers 3


I never second guess the decision of another bankruptcy lawyer, because only he or she has all the facts of your case. I can offer some general information. In many jurisdictions, its not required to reaffirm a real estate debt in order to retain the property. This is not entirely a bad thing.

A reaffirmation is voluntary on your part, but the effect of reaffirming the debt is to except in from bankruptcy. In many, if not most, jurisdictions its well settled that a debtor must reaffirm, redeem or surrender personal property (e.g., a vehicle). Holding on to it, even if you current on your payments, and just continuing them is not an option and a risk of repossession, among other things is there. So, often reaffirmation is the only practical course of action for many debtors, unless they have ready access to another vehicle.

Reaffirming the vehicle excepts the debt from the bankruptcy discharge. It will also likely show future payment history on your credit bureau. However, the non-reaffirmed debt is not likely to be similarly treated by a creditor.

A mortgage creditor may continue to send you statements and not risk violating your discharge order, because the documents are for information purposes only and not an attempt to collect the debt -- and, will likely be so marked. The underlying promissory note, however, is discharged.

Generally, when one discharges a real estate obligation, the creditor still retains lien rights -- e.g., they can foreclose down the line if you don't pay and get the property back. But, what they cannot do is sue you personally for any deficiency because the agreement you made with them that would have allowed that was discharged in the bankruptcy.

So, if at some far point in time your situation worsened instead of got better, you could simply have left the property without fear of the underlying debt. In effect, you got to keep the properties, but have an option to let them go with little potential harm to you. So, in exchange for being protected against a possible future default, debtors are not going to see the payments recorded on their bureau.

In law, far fewer decisions than you think can be classified as clearly right or wrong. Most often, an attorney must balance potential risks and rewards and competing priorities to make a judgment call on what will best protect you.

If you are not entirely sure of the bankruptcy effect on your real estate, contact your attorney. I am sure he will not mind explaining in more detail.

Best of Luck.

The posting attorney is admitted to the U.S. Tax Court and authorized to represent clients in all 50 states before the IRS. Outside of IRS matters, the posting attorney is licensed to practice law generally in the State of Texas and no other state. The information provided in this post is for general educational purposes only and should not be relied upon as legal advice by any party. No attorney-client relationship is formed with any party by the mere posting (or reading) of this information on the AVVO website. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency


Reaffirmation agreements only apply to personal property, such as a car, and do not apply to real estate. Under U.S. Bankruptcy Code Section 521(a)(6) reaffirmation agreements apply only to personal property.

Some mortgatge companies are very aggresive and attempt to fit the square peg of their mortgage loans into the round hole of reaffirmation. However, some authorities have even suggested that it rises to the level of malpractice to reaffirm a mortgage.


As a general rule, I don't recommend reaffirming real property loans. Recently, I have read several articles about banks refusing or failing to report any information with reagards to post bankruptcy mortgage payments, even where the debtor reaffirmed the debt.

Rob Taylor

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