What Is A Reaffirmation Agreement And How Does It Work? :: Charlotte Bankruptcy Lawyer

Question Sign Charlotte Bankruptcy Lawyer North Carolina Debt AttorneyFor those who are contemplating filing for bankruptcy protection one of the most important aspects of the process is how once a person has been discharged from bankruptcy they no longer are obligated to pay a debt. While this is great in many cases, there are some instances where a debtor might prefer to pay the debt anyway, even if it has been formally discharged. The agreement allowing this is what’s known as a reaffirmation agreement.


What is a reaffirmation agreement?


A reaffirmation agreement is a contract reached between two private parties and is not a standard part of the bankruptcy process. The agreement is signed between the debtor and the creditor who legally owns the property at issue. The agreement must also be approved by the bankruptcy court overseeing the process. There are other rules that the reaffirmation agreement must follow and if the person signing the reaffirmation agreement is not represented by a lawyer then a hearing will be held to ensure that the agreement complied with the rules.


What are some of these rules?


The law says that reaffirmation agreements must be entered into voluntarily, that they cannot place undue financial hardship on the debtor, that they must be in the debtor’s best interest and that they can be terminated any time before a person’s bankruptcy has been officially discharged or within 60 days of the time that the agreement was filed with the court, whichever is longer.


Why would I reaffirm debt?


Reaffirmation agreements are usually signed in cases where there is a secured debt on something like an automobile that you may need to retain following a bankruptcy. Reaffirmation is one way to ensure that you’ll keep the car as some companies may repossess the vehicle without such an agreement.


How does the reaffirmation agreement work?


It’s crucial to understand that reaffirmation agreements are not part of the bankruptcy process and are instead an entirely separate agreement reached between debtor and creditor with entirely new obligations. This means that if you fail to make your schedule payments as laid out in the agreement the debt will not be included in the bankruptcy and will instead continue to be owed to the creditor.


Reaffirming any debt is a serious matter and should be discussed with an experienced North Carolina bankruptcy attorney. Consulting an experienced attorney who understands the process is one way to ensure hat you make informed decisions that don’t come back to haunt you later.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.



“The Dangers of Reaffirmation Agreements in Bankruptcy,” by Sophie Walton, published at Yahoo.com.


See Our Related Blog Posts:

Making Sense Of Which Debts Are And Are Not Dischargeable During A Bankruptcy  :: Charlotte Bankruptcy Lawyer

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4 responses to “What Is A Reaffirmation Agreement And How Does It Work? :: Charlotte Bankruptcy Lawyer”

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      Arnold & Smith, PLLC

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      Arnold & Smith, PLLC

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