What is a “reaffirmation agreement” in a Chapter 11 bankruptcy?

In Minnesota, a reaffirmation agreement is a legal document that can be used when filing for Chapter 11 bankruptcy. This agreement states that the debtor is voluntarily agreeing to pay back a debt they previously may have discharged, like a car loan or mortgage. This allows the debtor to keep their property, like a car or house, while still going through the bankruptcy process. In a Chapter 11 bankruptcy, a reaffirmation agreement is a contract between the debtor and the creditor that states the debtor will still be responsible for any remaining payments on a loan or debt. This agreement must be approved by the bankruptcy court, which means the agreement must be in the best interests of both the debtor and the creditor. If the agreement is approved, the creditor is allowed to pursue legal recourse if the debtor fails to make payments. The debtor must sign the agreement before the judge or trustee will approve it. Reaffirmation agreements can be beneficial for debtors who want to keep their property and fulfill their financial obligations. They can avoid repossession or foreclosure of their property, while avoiding the full discharge of their debt. However, this is not always a good option for everyone and should be considered carefully. Debtors can also choose to surrender their property and have their debt discharged, if this is a better option financial wise.

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What is a “reaffirmation agreement” in a Chapter 11 bankruptcy?

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