If a bankrupt debtor wants to pay one of their dischargeable debts, they must enter into a reaffirmation agreement with their creditor. In this article, we’ll define the term “reaffirmation agreement” and explain under which circumstances a debtor might choose to enter into one. 

Key Takeaways

• A reaffirmation agreement reaffirms a bankrupt debtor’s intent to pay a dischargeable debt
• Reaffirmation agreements are strictly voluntary
• Reasons, why a debtor may choose to enter into a reaffirmation agreement, include to keep a property securing a debt or to prevent their co-obligor from having to pay the debt
• Reaffirmation agreements can be canceled within a certain time frame

What Is a Reaffirmation Agreement?

A reaffirmation agreement is an agreement that reaffirms a bankrupt debtor’s intent to pay a debt that could be discharged as part of the bankruptcy process.

Essentially, bankrupt debtors usually file for bankruptcy in order to discharge their obligation to pay certain debts. Not all debts are dischargeable but most are. However, there may be some circumstances under which a debtor still wants to pay a particular debt even though it can be discharged as part of their bankruptcy process. If that is the case, the debtor has every right to volunteer to pay a debt that would otherwise be discharged, as long as they do so with funds that are not part of the bankruptcy estate. To do so, the debtor must enter into something called a reaffirmation agreement with the creditor.

Reasons to Enter Into a Reaffirmation Agreement

Reaffirmation agreements are strictly voluntary. So why might a debtor choose to pay a debt that they could have discharged? Some reasons include:

• To keep property that would a creditor with secured debt has a lien on
• So that a co-obligor or guarantor who would have to satisfy the debt even if the debtor received a discharge does not have to pay
• To improve their credit score

Should You Enter Into a Reaffirmation Agreement?

Because entering into a reaffirmation agreement imposes obligations with serious financial consequences on a debtor, it is highly recommended to think things through carefully before deciding to enter into one. Some things to consider as part of this decision include:

• Whether or not the debt is actually secured
• Whether you really need to keep the property that is securing your debt
• If the property could be replaced with less money than it would cost to pay the debt
• Whether or not you can really afford to pay the debt
• Whether or not the co-obligor or guarantor would actually be required to pay the debt

You are not required to be represented by a lawyer in order to enter into a reaffirmation agreement, but it is still highly recommended to work with one. They will be able to help you determine whether or not it is actually in your best interest to reaffirm one or some of your debts, as well as navigate the entire bankruptcy process.

Can a Reaffirmation Agreement Be Cancelled?

If you decide after signing a reaffirmation agreement that you no longer want to pay that debt, you can cancel the agreement only before whichever of these dates is later: 

• The date of issuance of a discharge in the bankruptcy case
• 60 days from the date the reaffirmation agreement is filed with the bankruptcy court