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

A reaffirmation agreement is a contract that is entered into during a Chapter 11 bankruptcy in North Carolina. It is an agreement between the debtor and the creditor, where the debtor agrees to remain liable for a debt that would otherwise be discharged (canceled) in the bankruptcy. The agreement requires that the debtor continue to make payments on the debt as if the bankruptcy had not happened. Reaffirmation agreements are helpful to a debtor because they can help them to continue to build and maintain a good credit score. Creditors receive a financial benefit from reaffirming a debt because it reduces their risk of unpaid debts. However, there are limitations to when a reaffirmation agreement can be used. In order for a reaffirmation agreement to be accepted in a Chapter 11 bankruptcy, it must be approved by the court and must meet certain criteria. The agreement must be in writing, signed by both parties, and state that it was executed without coercion or undue influence. The debtor must also be able to show that they can afford to maintain the payments in the new agreement. Overall, a reaffirmation agreement is a useful tool in a Chapter 11 bankruptcy. It can help a debtor maintain a good credit score and reduce the risk of unpaid debts for creditors.

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

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