Simply stated, a reaffirmation agreement is an agreement that a debtor in a chapter 7 bankruptcy enters into with a creditor that reaffirms or re-obligates the terms of the original contract with that creditor. Reaffirmation agreements are applicable in Chapter 7 bankruptcy. If there is no undue hardship to you, you may have a creditor that you want to continue to pay after filing a chapter 7 (straight) bankruptcy. These agreements are usually utilized when a debtor wants to keep a vehicle or a home.
When you file your chapter 7 petition with the bankruptcy court, you will also file a statement of intentions. This is usually where you state your desire to reaffirm with a particular secured creditor. It is very helpful to be contractually current on the debt that you wish to reaffirm and to have the collateral (i.e. home or auto) properly insured. It is generally not advised to reaffirm a debt with an unsecured creditor. It is important, however, that you discuss your personal desires about maintaining a relationship with a particular creditor with your attorney to determine if you might be putting yourself in a position of undue hardship.
If you have expressed your desire to reaffirm a debt, the creditor will, in most circumstances, provide you and your attorney with a reaffirmation agreement that must be signed by you, your attorney and the creditor and then filed with the bankruptcy court in order to be enforceable.
We strongly advise all of our clients to seriously consider the financial commitment you are making when entering into a reaffirmation agreement with any creditor to insure that you are not putting yourself in a hardship situation.
If you need further advice regarding your financial situation please contact our office that is nearest to you to schedule a free consultation with one of our experienced, licensed attorneys who can evaluate your current financial situation in a confidential setting.