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

A reaffirmation agreement in a Chapter 11 bankruptcy in Alaska is an agreement between a debtor and a creditor that allows the debtor to remain liable for a debt after the bankruptcy has been filed. The debtor must voluntarily sign the agreement, which acknowledges that the debtor will pay the debt in full, despite the discharge of other debts in the bankruptcy. For example, if an individual files for Chapter 11 bankruptcy in Alaska but would like to keep a vehicle and continue making payments on it, the individual must agree to reaffirm the debt. The creditor will then agree to keep the debt on the debtor’s credit report, if the debtor makes all payments on the debt according to the agreement. The reaffirmation agreement is important for debtors who wish to maintain their credit ratings, since the debt does not disappear when the bankruptcy is filed. The reaffirmation agreement is also beneficial to creditors, who will continue to receive payments on the debt that would otherwise have been wiped out in the bankruptcy. The reaffirmation agreement is legally binding, and the debtor must adhere to the terms of the agreement, such as making all agreed upon payments, in order to keep the debt on the individual’s credit record. For this reason, a debtor should carefully consider any reaffirmation agreement before signing, and should seek the advice of legal counsel and a credit counselor when making this decision.

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

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