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

A reaffirmation agreement is a document that a debtor can sign in Chapter 11 bankruptcy to keep a secured debt. This agreement is made between a debtor and a creditor, and allows the debtor to continue making payments to the creditor with the promise that the creditor will not collect any payments if the debtor defaults. Under Chapter 11 bankruptcy, a debtor may be able to keep some of their property if they can continue to make payments. If the debtor is unable to pay the full amount of the debt, they may be able to negotiate a lower payment with the creditor and then enter into a reaffirmation agreement. The agreement must meet certain criteria as set out by the bankruptcy court. To enter into a reaffirmation agreement, the debtor must meet certain requirements including the debtor must be able to pay the debt, the amount of the debt must not be excessive, and the agreement should be in writing. The debtor must also receive independent legal advice and a copy of the reaffirmation agreement before signing it. Once a reaffirmation agreement is signed and approved by the court, the debt is no longer extinguished. This means the creditor can require the debtor to either make regular payments or be liable for the full amount owed on the debt. It is important to note that if a debtor enters into a reaffirmation agreement, they are still responsible for any unpaid debts after the bankruptcy case is discharged.

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

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