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

A reaffirmation agreement in a Chapter 11 bankruptcy is an agreement made between the debtor and a creditor that allows the debtor to continue paying back the debt they owe to the creditor without having the debt discharged. This can allow the debtor to keep certain assets that may not be entirely paid off. A reaffirmation agreement is a voluntary agreement that must be accepted and signed by both parties. The debtor agrees to continue paying the debt that would otherwise be discharged in the bankruptcy. The creditor agrees to accept the payment from the debtor for the remaining balance of the debt. The purpose of a reaffirmation agreement is to allow the debtor to keep certain assets, such as their house or vehicle, that would otherwise be taken away and cannot be protected by filing Chapter 11 bankruptcy. By entering into the reaffirmation agreement, the debtor can ensure that they will retain these assets. Once the agreement is signed, both parties are legally obligated to fulfill the terms. The debtor must continue to pay the debt in accordance with the agreement and the creditor must accept the payments. If the debtor fails to make a payment, the creditor can take legal action against them. Reaffirmation agreements are not required for all types of debts; they can only be used for secured debts. However, they can be extremely beneficial for debtors who wish to keep their assets and continue paying their debts.

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

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