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

A reaffirmation agreement is an option available to a debtor filing for Chapter 11 bankruptcy in Minnesota. This agreement allows a debtor to reaffirm/re-enter into a voluntary agreement with a creditor to keep a secured debt even after a bankruptcy is filed. This essentially means that the debtor voluntarily agrees to keep paying the existing obligations to the creditor. The agreement must be in writing, and must be signed by both the debtor and the creditor. The debtor must then send the agreement to the person appointed by the court to oversee the bankruptcy proceedings, the U.S. Trustee, so the agreement can be reviewed. The U.S. Trustee will then make sure the agreement is fair, and that the debtor fully understand the obligations they are entering into. Once the U.S. Trustee approves the agreement, the debtor is then legally bound to fulfill the terms of the agreement, just as they were before they filed for bankruptcy. This means that if the debtor fails to make payments or otherwise fails to meet the terms of the agreement, the creditor can take legal action or use other remedies. In some cases, a creditor may even be able to repossess the property or item the debtor has agreed to pay for in the agreement. In other words, a reaffirmation agreement in a Chapter 11 bankruptcy is a voluntary agreement between a debtor and a creditor that allows the debtor to keep a secured debt even after a bankruptcy is filed. It must be approved by the U.S. Trustee and, if entered into, the debtor is legally bound to fulfill the terms of the agreement.

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

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