You may ask, what do intentions have to do with Bankruptcy? In every Chapter 7 bankruptcy case, you need to file a “Statement of Intentions” with the court. This statement is to tell the court, and your creditors what you intend on doing with your secured debts (like house and car loans). There are many rules on when you need to “carry out” these intentions, but the bottom line is that you need to make at least a decision when you file your case about what you want to do with your house or car, or furniture. If you don’t do what you say on the statement of intentions within a certain amount of time, the auto finance company may be able to repossess your vehicle!
It is not automatic that when you file a Bankruptcy case that you lose your house or car. When you speak to an experienced bankruptcy attorney, that attorney will give you options, such as keeping or surrendering (giving up) the thing. By the time you leave my office after your first meeting, you’ll know what your options are. Then, by the time you file your bankruptcy case, you will have to sign the “Statement of Intentions” for your attorney to file with the court.
Once your Bankruptcy case is filed, the court sends out a notice to every company you owe. So when your car finance company or mortgage company gets the notice, they can look at your court filing to see what you want to do with your house or car.
You have some choices: You can keep and pay for the item, and sign a document called a reaffirmation agreement. The reaffirmation agreement is like a new contract, so that, if you don’t pay later but have signed the agreement, the company can take the item and sue you. Or, you could try to keep the item and just pay for it without signing the agreement. Some car finance companies allow this, but most do not. In the case of mortgages, usually, clients just keep making payments, and, if they are current, they will be able to keep their home. The third option is to surrender the item, that is, give it back, and owe nothing further.
These are important decisions. You should consult with an experienced bankruptcy attorney before stating your intentions in a bankruptcy cases.
Daniel J. Winter
LAW OFFICES OF DANIEL J. WINTER
53W. Jackson Boulevard
Suite725
Chicago,IL60604
312-789-9999
For more Banrkuptcy terminology in the Bankruptcy Alphabet, see my colleagues throughout the country and their blogs
