Reaffirmation Agreements Explained

In some situations, a person filing bankruptcy may want to continue paying a particular debt, even if that debt can otherwise be discharged. In most circumstances, this debt is tied to either a home or car. In order for this debt to survive discharge, you will need to sign, and have filed with the court, a reaffirmation agreement.

How do Reaffirmation Agreements Work?

There are special rules that apply to reaffirmation agreements, and they are entirely voluntary. Reaffirmation agreements are not required. In order to establish a reaffirmation agreement in your bankruptcy case it must meet the following:

  • It must be in your best interests;
  • It cannot place an undue burden on you or your family; and
  • It must be cancelled prior to your discharge, or within 60 days after the agreement is filed with the court.

While reaffirmation agreements may seem like a good idea (and sometimes they are), they have serious consequences, and the court must approve the reaffirmation agreement. If the court does not approve the reaffirmation agreement, it will not have binding effect.

Should I Sign a Reaffirmation Agreement?

As I stated earlier, reaffirming a debt is a serious decision. If you reaffirm a debt and fail to pay it after you’ve received a discharge, you will still owe that debt. That particular debt will not be discharged. Furthermore, that creditor will have the right to take legal action against you to recover that property. That creditor can also take file a lawsuit against you, or ultimately obtain a judgment against you. So, reaffirmation agreements must be taken seriously, and need to be considered carefully in a bankruptcy case.

If you are interested in learning more about filing for Chapter 7 or Chapter 13 bankruptcy, I urge you to contact me at The Cherney Law Firm, LLC. I am proud to serve the residents of Roswell and the surrounding areas.