What Is an Reaffirmation Agreement

A reaffirmation agreement is a legal document that is sometimes used in bankruptcy cases. It is an agreement between a debtor and a creditor that reaffirms the debtor`s obligation to repay a debt that would otherwise be discharged in the bankruptcy.

In practice, a reaffirmation agreement is often used when a debtor wants to keep a certain asset, such as a car or a home, that is secured by a debt. By signing a reaffirmation agreement, the debtor agrees to continue paying the debt even after the bankruptcy case is closed.

It is important to note that reaffirmation agreements are voluntary. Creditors cannot force debtors to sign them. Additionally, reaffirmation agreements must be approved by the court. In order to be approved, the agreement must be in the debtor`s best interests and must not impose an undue hardship on the debtor.

Reaffirmation agreements have both benefits and drawbacks. On the one hand, they allow debtors to keep assets that might otherwise be lost in bankruptcy. On the other hand, they can be a risky proposition for debtors who are already struggling to make ends meet. If a debtor signs a reaffirmation agreement and then is unable to make the required payments, they could find themselves facing legal action from the creditor.

If you are considering signing a reaffirmation agreement, it is important to consult with a bankruptcy attorney. An experienced attorney can help you evaluate the risks and benefits of the agreement and can advise you on whether it is in your best interests.

In conclusion, a reaffirmation agreement is a legal document that allows debtors to keep certain assets that would otherwise be lost in bankruptcy. While they can be a useful tool in some cases, they can also be risky for debtors who are already struggling financially. If you are considering signing a reaffirmation agreement, it is important to consult with an attorney to fully understand the potential risks and benefits.