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

A “reaffirmation agreement” is a legal document signed by a debtor in Chapter 11 bankruptcy to maintain ownership and continue making payments on a secured debt. Under Chapter 11, the debtor is given the option to either reaffirm or surrender a secured debt. A reaffirmation agreement states that the debtor believes they owe a certain amount of money to the creditor and agrees to make regular payments on the debt in order to keep the item from being repossessed. A creditor typically requires a debtor to sign a reaffirmation agreement if they wish to keep a secured item (such as a home, car, or furniture). When a debtor signs a reaffirmation agreement, they are agreeing to remain liable for the debt even though they are filing a bankruptcy case. By signing, the debtor is giving up their right to discharge the debt in the bankruptcy. This means that if they are unable to make their payments, the creditor can take legal action to collect the debt. It is important to note that a debtor can always change their mind and revoke a reaffirmation agreement within 60 days of signing it. They must also attend a court-approved credit counseling session prior to signing any reaffirmation agreement in West Virginia. It is important for debtors to review all of their options before signing a reaffirmation agreement and make sure that it is in their best interest to do so.

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

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