One of the most common questions I get about Chapter 7 bankruptcy in Missouri or Illinois is, “Will I lose all my property?” You determine the fate of your property in a statement of intention. You have three choices in a statement of intention, which are to reaffirm, redeem or surrender the property. Which one should you choose?

Of course, a qualified and experienced St Louis bankruptcy attorney can help you decide what would be best for your situation but, ultimately, it is your choice. The first option is reaffirm. If you reaffirm a debt, you continue to pay on the property under the same terms instead of discharging, or eliminating, the debt. For example, if you decide to reaffirm your car, you will simply continue to make your car payments as you did before. Keep in mind, if you don’t make your payments, the lender will still be able to take your property in this scenario.

A lot of people choose to reaffirm their property in order to keep it in a Chapter 7 bankruptcy in Missouri and Illinois. If, after your other debts are eliminated, you can afford to keep making the payment, then more power to you! If, however, you think the payment still may be hard to make, you might want to look at other options.

The second option is to redeem the debt. If you redeem, you would pay the creditor for the market value of the property instead of what you owe and call it even. For example, if your car is worth $4,000 but you owe $6,000, you would pay the lender $4,000 and keep the property.

This option sounds wonderful considering you can save several thousand dollars but the payment must be in a lump sum, which is a hard way for most people to pay. There are some companies, however, that do redemption loans, which could save you the headache of coming up with the money out of pocket.

The third option is to surrender the property. By surrendering your property, you give it back to the lender and get rid of the debt. While this may not sound like an appealing option, it might be a good idea. If you know that you cannot afford the payments you are making on the property, surrendering it allows you to eliminate the debt and start over with a budget that lets you live the life you want to live. Your income can finally be yours again.

The decision is yours but it is typically pretty clear what the most responsible and best decision for your budget will be. Still having trouble deciding if Missouri or Illinois Chapter 7 bankruptcy is right for you? Request a free copy of my Illinois and Missouri bankruptcy book, “Get Out of Debt: Secrets Your Creditors Don’t Want You to Know.”

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This entry was posted on Friday, March 19th, 2010 at 9:26 am and is filed under Chapter 7 Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.