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

In South Carolina, a “reaffirmation agreement” is a legal contract in a Chapter 11 bankruptcy case that allows a debtor to keep a particular secured debt, such as a car loan or mortgage, instead of having it discharged. The agreement must be in writing and must be filed with the bankruptcy court. The debtor must also sign the agreement and typically must show proof that they have the ability to repay the debt. Reaffirmation agreements should not be confused with reaffirmation of debt, which is a different process. A reaffirmation agreement allows the debtor to keep certain property secured by a debt, such as a car or house. If the debtor would rather keep the property than have it discharged, they can enter into a reaffirmation agreement. This agreement requires the debtor to make payments on the debt and remain current on the payments. In exchange, the debtor is allowed to keep the property. The creditor can ignore the terms of the bankruptcy and continue to seek payment on the reaffirmed debt. Reaffirmation agreements can be beneficial to the debtor if they intend to keep the property. On the other hand, if the debtor is unable to make the payments on the debt, they are not protected from the creditor’s collection efforts. Therefore, it is important for the debtor to consider the pros and cons of entering into a reaffirmation agreement before signing it.

Related FAQs

How long does it take to get a plan of reorganization approved in a Chapter 11 bankruptcy?
How does a creditor’s committee work in a Chapter 11 bankruptcy?
What is a “liquidating plan” in a Chapter 11 bankruptcy?
When must I pay my creditors during a Chapter 11 bankruptcy?
How long does it take to file for Chapter 11 bankruptcy?
What is “secured creditors' rights litigation” in a Chapter 11 bankruptcy?
How does a Chapter 11 bankruptcy affect my credit?
Does filing for Chapter 11 bankruptcy protect me from criminal prosecution?
What is a “conversion to Chapter 7” in a Chapter 11 bankruptcy?
How do I avoid having my case dismissed in a Chapter 11 bankruptcy?

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

Related FAQs

Related Blog Posts