Here is a question that was asked on AVVO.com:
I signed a reaffirmation of debt for a car loan in front of the court trustee. The terms were changed from the original purchase, in my favor. The loan company has absolutely tried every angle not to agree to the terms and I’m getting further indebt with them thru perpetual late fees and the unpaid balance. Even though I have made all the court paid payments on time.I would not signed if I knew this would have happened. Is a reaffirmation just a generic promissory note and I am responsible what ever the terms are, or can I hire an attorney to get out of this bad deal. Can I force them via a judge to abide to the new terms or end the contract?
Here is my answer:
If you signed a reaffirmation agreement, you need to speak to your attorney, if you had one in the bankruptcy, immediately. If you did not have an attorney, you should speak to a bankruptcy attorney right away. There are time deadlines involved to cancel (rescind) the agreement. An attorney needs to review the terms to see what you and the bank are required to do. Then you can see what the best way to approach this would be. You may or may not be able to cancel the agreement depending on the time frame. Or, if you lived up to the terms of the agreement, an attorney might be able to help you enforce it. No matter what, you should call an attorney right away.
Reaffirmation is a very important tool in a Chapter 7 bankruptcy case. By signing a reaffirmation, you are legally saying that regardless of the bankruptcy, you agree to be personally liable on the loan, regardless of the bankruptcy. If you don’t reaffirm, nobody can sue you for the balance of the loan (in the case of a car loan, the amount owed if the car is repossessed) Reaffirming allows people to keep items that the financed, most often cars or trucks, and, at the same time it keeps the finance companies happy, because the debtor (person in bankruptcy) is now legally responsible for the debt.
It is very important that you have a lawyer for a Chapter 7 Bankruptcy and that you discuss all of the consequences of signing a reaffirmation agreement before doing so. If not, you could end up in a situation like the person asking the question described.
Daniel J. Winter
BankruptcyLawChicago.com
djw@DWinterLaw.com
312-789-9999
Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illiinois
