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

In a Chapter 11 bankruptcy in Texas, a “reaffirmation agreement” is a legally binding contract between a debtor and a creditor that reaffirms the debtor’s obligation to pay a particular debt. In other words, a reaffirmation agreement allows a creditor to continue to pursue a claim on a debt against a debtor, despite the bankruptcy proceedings. In order for a reaffirmation agreement to be valid, it must be voluntarily agreed upon by the debtor and must be approved by the court. It must also include language that states the discharge in bankruptcy will not affect it, and that the debtors can still be held liable for the debt. The goal of a reaffirmation agreement is to allow the debtor to keep certain assets, such as a car or a home, that would otherwise be subject to repossession. It is important that debtors thoroughly review the language of a reaffirmation agreement before signing it, as they can potentially be held liable for any unpaid debt that is reaffirmed. Reaffirmation agreements can also be beneficial for creditors, as it allows them to receive some payment even if the debtor files for bankruptcy. Thus, a reaffirmation agreement is a legally binding contract between a debtor and a creditor that reaffirms the debtor’s obligation to pay a particular debt, despite the bankruptcy proceedings.

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

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