What is a Reaffirmation Agreement?
The 341 Meeting Information Sheet provides a great explanation of what a Reaffirmation Agreement is:
“Even if a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car. To promise to pay that debt, you must sign and file a reaffirmation agreement with the court. Reaffirmation agreements are under special rules and are voluntary. They are not required by bankruptcy law or by any other law. Reaffirmation agreements–
must be voluntary;
must not place too heavy a burden on you or your family;
must be in your best interest; and
can be canceled anytime before the court issues your discharge or within 60 days after the agreement is filed with the court, whichever gives you the most time.
If you are an individual and you are not represented by an attorney, the court must hold a hearing to decide whether to approve the reaffirmation agreement. The agreement will not be legally binding until the court approves it.
If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. The creditor can also take legal action to recover a judgment against you.”
So if you have a debt you want to keep after your bankruptcy - like a home or a car loan - you can do that with a Reaffirmation Agreement.
If you want to see what this document looks like, a blank reaffirmation agreement can be found here.
If you think you would like to reaffirm a debt, talk to your attorney about whether this is a good idea, so you understand the pros and cons of this decision. If you decide to move forward with a reaffirmation, your creditor will usually prepare the agreement for you and your attorney to review and sign. The Reaffirmation Agreement is then filed with the bankruptcy court.