What is a reaffirmation agreement?

A reaffirmation agreement is a type of legal agreement between a debtor and a creditor that is commonly used in preference to the discharge of the debt in bankruptcy proceedings. It allows the debtor (the person filing for bankruptcy) to keep certain property that would typically be forfeited in a Chapter 7 Bankruptcy filing. In exchange for keeping specific property, the debtor agrees to continue making payments to the creditor. Reaffirmation agreements are primarily used in California and other states with consumer protection laws to help ensure that the debtor can keep property that is essential to them such as their automobile or home. Generally, the debtor seeks to keep ownership of property that has value and is necessary for them to keep their job or be able to get to and from work. In California, there are limits to the amount a debtor can agree to repay in a reaffirmation agreement. The debtor must also demonstrate that they can afford to make the payments without causing undue financial hardship. The amount of a reaffirmation agreement cannot be more than the value of the property being kept by the debtor. Furthermore, the debtor must also complete an approved financial education course before the reaffirmation agreement can be finalized. Reaffirmation agreements must be approved by the court before they are finalized. Depending on the specific details of the agreement, the court may or may not approve the agreement. If approved, the agreement is legally enforceable, and the debtor is obligated to make the agreed payments.

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What is a reaffirmation agreement?

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