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

A “reaffirmation agreement” in a Chapter 11 bankruptcy is a legal agreement in which a debtor agrees to continue paying a debt that is otherwise dischargeable in the bankruptcy. It is used to ensure that creditors receive payment on the outstanding debt despite the bankruptcy filing. This agreement is voluntary; the debtor is not required to enter into one and the creditor cannot force the debtor to do so. In the state of Utah, the debtor must sign a written reaffirmation agreement and provide the creditor a copy. The agreement must include the name of the creditor, the amount of the debt, and the terms and conditions of payment. It is important to note that if a debtor enters into a reaffirmation agreement, they are still liable for the debt if it is not paid according to the terms and conditions of the agreement. When filing for a Chapter 11 bankruptcy in Utah, the court considers any reaffirmation agreements. The court may set up a hearing to review the agreement and make sure it is in the best interest of the debtor. If it is determined that the agreement is unconscionable (unfairly one-sided) or if the debtor cannot afford the payments, the court may not approve the agreement. It is important to understand that reaffirmation agreements may have serious consequences. They are legally binding and can result in serious financial consequences if not followed. It is important to consider all aspects of such an agreement before signing.

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

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