What is a reaffirmation agreement?

A reaffirmation agreement is a contract between a debtor and a creditor that reaffirms a debt that is otherwise dischargeable in bankruptcy. It allows the debtor to keep the collateral associated with the debt and continue making payments on it, rather than have the debt discharged and the collateral repossessed. The reaffirmation agreement must be approved by the bankruptcy court in the state of North Carolina in order to be legally binding. The court will consider the circumstances of the case before determining whether the agreement is in the debtor’s best interest and if it is reasonable for the creditor. For example, if a debtor has a car loan and wants to keep the car, they would enter into a reaffirmation agreement with the creditor. The agreement would give the creditor assurance that they will receive payment from the debtor, while the debtor will retain the car instead of having it repossessed. The debtor should be aware of the risks associated with reaffirmation agreements. If the debtor breaches the terms of the agreement, the creditor could repossess the collateral and sue the debtor for any remaining balance. The debtor should also be informed of their right to cancel the agreement within 60 days of signing. In North Carolina, reaffirmation agreements are an important part of creditors rights law and must be carefully considered before they are entered into.

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What is a reaffirmation agreement?

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