What is a reaffirmation agreement?

A reaffirmation agreement is a document that is used in Chapter 7 bankruptcy law in Michigan. It allows the debtor to keep certain assets, such as a car or home, even though they are going through a bankruptcy. Under the law, these assets would be considered ‘secured debts’ and would normally be sold to pay back creditors. However, with a reaffirmation agreement, the debtor acknowledges that they will remain liable for the secured debt and will make payments as normal. The agreement must be approved by the court, and it must be based on the debtor’s ability to make the payments. The court will consider the debtor’s income, expenses, and other debts when determining if the agreement is fair. If it is not fair, the agreement may be rejected. Reaffirmation agreements are voluntary and must be signed by both the debtor and the creditor to be valid. The agreement should clearly indicate the terms of the debt, and the debtor should read the document carefully before signing it. They should also keep a copy of the agreement and all related documents. Reaffirmation agreements are not required during a bankruptcy, and some debtors choose not to enter into them. However, if a debtor wishes to keep an asset that is secured by a loan, such as a vehicle or home, they may choose to enter into a reaffirmation agreement.

Related FAQs

What is a reaffirmation agreement?

Related FAQs

Related Blog Posts