What is creditor reaffirmation?

Creditor reaffirmation is a legal concept in bankruptcy law that applies to Rhode Island. When a person files for bankruptcy, many of their debts are discharged, or eliminated. However, if a debtor wishes, they can voluntarily reaffirm a debt by entering into an agreement with a creditor. This agreement says that the debtor will still be required to repay the debt even though it has been discharged as part of the bankruptcy proceedings. Reaffirmation is primarily used by debtors who want to keep certain possessions, such as a vehicle, that are secured by the debt in question. By reaffirming the debt, the debtor agrees to continue making payments on the loan despite the bankruptcy protection. As a result, the creditor can still repossess the item if the debtor defaults on the payment. Reaffirmation must be done carefully, as it can be difficult to get out of a reaffirmation agreement, once it is set in place. The court must also approve of any agreement that the debtor and creditor come to. This is to protect the debtor from signing onto an agreement that would cause them financial hardship. Reaffirming a debt can limit the protection offered by bankruptcy, as the debt will still need to be paid back. Therefore, it is important to carefully consider the merits of reaffirmation before entering into such an agreement.

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What is creditor reaffirmation?

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