What is creditor reaffirmation?

Creditor reaffirmation is a process by which a debtor in bankruptcy reaffirms an existing debt with a creditor. It is designed to preserve the debt and allow the debtor to keep or pay the debt after the bankruptcy is complete. In Hawaii, the reaffirmation process is governed by state usury laws, which set limits on the amount a creditor can charge for interest or fees. In order to reaffirm a debt, the debtor and the creditor must reach an agreement, and the debtor must sign an affidavit stating they want to reaffirm the debt and explaining why. In addition, the debtor must provide financial information regarding the debt and sign a reaffirmation agreement with the creditor. After this agreement is submitted to the court, the court will review it to ensure that the debtor is able to reasonably pay the debt. Reaffirmation of a debt can help the debtor avoid costly repossession of their assets or a debt collector pursuit of the debt after the bankruptcy is over. It also helps creditors recoup some of their losses. However, it is important to remember that reaffirming a debt does not discharge the debt or erase it from a credit report. The debt will still appear on the debtor’s credit report, and the creditor can still take action if the debtor fails to make payments. For this reason, it is important to understand the risks before deciding to reaffirm a debt.

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What is creditor reaffirmation?

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