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

A reaffirmation agreement is an agreement between a debtor and a creditor in a Chapter 11 bankruptcy. It is an agreement from a debtor to pay back a debt, even after the debt has been erased under the bankruptcy. Under the Bankruptcy Code, a debtor can agree to pay back a discharged debt that is owed to a creditor, so long as the agreement meets certain criteria. A reaffirmation agreement is signed by both the debtor and creditor, and must be approved by the court. Reaffirmation agreements can be beneficial to a debtor, allowing them to keep certain assets that they may not otherwise be able to keep. For example, if a debtor files for bankruptcy in Oregon and has a car loan, they could keep the vehicle if they enter into a reaffirmation agreement with the creditor. The creditor has the right to repossess the car if the debtor does not make payments on the loan, even in bankruptcy, unless the debtor has agreed to continue to make payments and has a signed reaffirmation agreement in place. Reaffirmation agreements in Oregon require the debtor to attend a counseling session to ensure that they understand the financial obligations of the agreement before they are allowed to proceed. The counseling must be completed by an approved organization or credit counseling agency. This counseling session is an important step in protecting the debtor and ensuring that they understand the consequences of the agreement before entering into it.

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

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