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

A reaffirmation agreement in a Chapter 11 bankruptcy is an agreement made between a debtor and a creditor in which the debtor agrees to be personally liable for certain debts that may have been discharged in bankruptcy. Under this agreement, the debtor agrees to continue making payments on the debt as if the bankruptcy had never happened. This agreement is voluntary and the debtor can only be asked to reaffirm debt by the creditor. It is important to note that in South Carolina, a debtor can only enter into a reaffirmation agreement if the U.S. Trustee approves it. The main reason for entering into a reaffirmation agreement is to keep an asset such as a vehicle or home. If a debtor is current on a vehicle loan and wants to keep the vehicle, they can enter into a reaffirmation agreement with the lender. This helps the debtor as it keeps the lender from repossessing the vehicle. It helps the creditor as it ensures they will still get paid. In order for the debt to be reaffirmed in South Carolina, a debtor and creditor must fill out the appropriate forms and submit them to the bankruptcy court. The court will then review them to make sure the terms of the agreement are fair and the debtor can afford to make the payments. If the court approves the agreement, it will become binding and the creditor can no longer try to collect the debt from the debtor. Overall, a reaffirmation agreement in a Chapter 11 bankruptcy is an agreement between a debtor and a creditor that allows the debtor to be personally liable for certain debts that were previously discharged. This agreement helps both the debtor and creditor as it allows the debtor to keep an asset and it ensures the creditor will still be paid. It is important to note that the court must approve a reaffirmation agreement before it can become binding.

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

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