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A reaffirmation agreement is a legally binding contract between a debtor and a creditor that keeps a specific debt alive through bankruptcy. Under Section 524(c), when you reaffirm a debt, you agree to remain personally liable for it even after your discharge. This is most commonly used for car loans and sometimes mortgages.
This site will explain when reaffirmation makes sense, when it does not, and what the legal requirements are. We will cover the court approval process, the presumption of undue hardship, the 60-day rescission period, and what happens if you sign a reaffirmation agreement and later cannot make the payments.
Reaffirmation is one of the most consequential decisions in a Chapter 7 case, and many debtors sign these agreements without fully understanding the implications. We will provide the information you need to make an informed choice about whether to reaffirm, redeem, or surrender secured property.
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Frequently Asked Questions
What is a reaffirmation agreement?
A reaffirmation agreement is a legally binding contract signed during Chapter 7 bankruptcy in which you agree to remain personally liable for a specific debt, typically a car loan or mortgage. Under 11 U.S.C. Section 524(c), it must be filed before discharge and requires court approval if you lack attorney representation.
Should I reaffirm my car loan in bankruptcy?
It depends on whether you owe more than the car is worth and whether you can afford the payments. If you reaffirm and later default, the lender can repossess the car and sue you for the deficiency balance. If you owe less than the car's value and need reliable transportation, reaffirmation may make sense.
Can I cancel a reaffirmation agreement?
Yes. Under 11 U.S.C. Section 524(c)(4), you can rescind a reaffirmation agreement within 60 days after it is filed with the court, or before discharge is entered, whichever is later. No reason is required. After that window closes, the agreement is permanent and survives the bankruptcy discharge.
Check Your Bankruptcy Discharge Eligibility
Use the free screener at 1328f.com to check whether federal timing bars affect your ability to receive a bankruptcy discharge.
Your Three Options for Secured Debt in Chapter 7
Reaffirm: Keep the debt, keep the property, stay personally liable. Risks
Redeem: Pay current value in a lump sum, keep the property, discharge the rest.
Ride-Through: Keep paying without reaffirming (limited availability). Details
Not sure? Read When to Say No to Reaffirmation
Explore Reaffirmation Topics
Dive deeper into reaffirmation agreements and their risks: