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

A reaffirmation agreement in a Chapter 11 bankruptcy is a written contract between a debtor and a creditor that allows the debtor to keep certain assets. This type of agreement is usually made in regards to secured debts where the creditor is willing to keep the secured debt if the debtor promises to keep making payments on it. The agreement is beneficial for both the debtor and the creditor because it allows the debtor to keep certain assets they may not be able to keep in a regular Chapter 7 bankruptcy. For example, the debtor may be allowed to keep their home or car if they enter into a reaffirmation agreement. The debtor must enter into the agreement voluntarily and they have the right to cancel the agreement within a certain period of time. Additionally, the creditor must provide a copy of the agreement to the debtor, provide a statement that explains the rights of the debtor, and provide a statement that explains the consequences of reaffirming the agreement before the debtor can sign it. By entering into a reaffirmation agreement, the debtor agrees to continue to honor their obligation to the creditor and to be legally responsible for the debt. This means the creditor can still take action against the debtor if payments are not made or if the terms of the agreement are not met. The debtor should take these aspects into consideration before signing a reaffirmation agreement in a Chapter 11 bankruptcy.

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

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