Reaffirmation Agreements

• A reaffirmation agreement is a contract created to bind a debtor to continued debt payments. Reaffirmation agreements can be signed following Chapter 7 bankruptcies to continue paying "dischargeable" debts that usually include property such as boats or automobiles. Signing a reaffirmation agreement allows a debtor to keep this property as collateral as long as payments are made on time. For example, if a debtor signs a reaffirmation agreement to continue making automobile payments following bankruptcy, the debtor's car would avoid repossession.
  
  

Facts

• Reaffirmation agreements are completely voluntary and are not legally required by state and federal laws or bankruptcy codes. A debtor can choose to repay debt without signing a reaffirmation agreement, but it is up to a lender to agree to this situation. If a debtor wants to file a reaffirmation agreement, the agreement must be signed and filed no more than 60 days after bankruptcy has officially closed.
  
  

Procedure

• Due to the inherent nature of a reaffirmation agreement, it is not necessary to reopen a bankruptcy case to file a reaffirmation agreement. Instead, the United States Bankruptcy Court requires an official meeting with the debtor and a judge to ensure that the debtor understands his reaffirmation is purely voluntary. Following the meeting, it's up to the judge to decide whether a reaffirmation "is in a debtor's best interest," according to legal resource Bankruptcy Law Network.
  
  

Required Paperwork

• To get started with the reaffirmation agreement process, a debtor must first file the required paperwork. This paperwork includes a reaffirmation agreement cover sheet and Form B 240B, which is the motion for approval of reaffirmation agreement. Once this motion and cover sheet are filed, a hearing date will be set in court for the debtor to appear before a bankruptcy judge, who must then approve or disprove the agreement from going forward. If the judge allows the debtor to proceed with a reaffirmation agreement, the debtor will receive notice in the mail from the court.