In the Land of Lincoln, keeping your real property is possible just as long as you “reaffirm” your debt to the mortgage company throughout the case. In short, you have to notify the Home Equity Loan Company by getting in touch with them that you want a “reaffirmation agreement.”
That way, the mortgage company will know about it and will send you something for you to sign your name and file with the court. The reaffirmation agreement is actually a contract between you and the creditor that you are legally responsible and will pay the entire debt or a portion of the money due, even though the debt would otherwise be discharged in the case. And in return, the creditor promises not to take back or repossess your realty provided that you continue to make payments.
Moreover, it puts you back on the hook legally for the mortgage debt, and at the same time it allows you to keep your real estate. In other words, it lets the mortgage go through the bankruptcy without a scratch. Reaffirmation of a debt must be done before the discharge is entered in the case.
The reaffirmation agreement must be signed and filed with the court. After that, the judge will reach a verdict if the reaffirmation agreement is accepted. The court must find that the reaffirmation does not cause unwarranted hardship on you or your dependents and that it is in your best interest.
Reaffirmation agreements are free. If you agree to reaffirm a debt and fail to make the payment necessary, the creditor can take action against you so as to recover any property and you may remain personally held responsible for any remaining debt that you have reaffirmed.
So in order for you to keep your property while in Chapter 7 bankruptcy, make it a point that you are up-to-date when it comes to the mortgage and check. Also, make sure that you are within the amount of equity that you are allowed to have in the Prairie State.
When you come right down to it, being up-to-date on your payments at the time of the bankruptcy filing, through the bankruptcy process, and beyond the bankruptcy discharge is the only condition if you want to keep your real estate during your Chapter 7 bankruptcy. Or else, there is a possibility that the automatic stay will be lifted regarding that property and foreclosure proceedings initiated before the bankruptcy is even complete.
