What is a reaffirmation agreement and how does it work in Chapter 7 Bankruptcy?

A reaffirmation agreement is a legally binding agreement between a debtor and a creditor that states the debtor will continue to be responsible for the payment of a debt even though the debt would normally be discharged in the context of a Chapter 7 bankruptcy. The reaffirmation agreement can be entered into before or after the discharge of the debt in the bankruptcy. In Pennsylvania, a debtor must sign a reaffirmation agreement in order for it to be valid. The agreement must be signed in the presence of a notary public and then filed with the court. The debtor must also receive independent legal advice and submit a financial statement showing his or her current financial situation. After the reaffirmation agreement is filed, the court reviews it to ensure that it was signed voluntarily and in the debtor’s best interest. If the court approves the agreement, it is binding on both parties, and the debtor continues to be responsible for repaying the debt. If the debtor fails to make payments on the debt in accordance with the terms of the reaffirmation agreement, the creditor can take action against the debtor in the same manner that it could prior to the bankruptcy filing. This means the creditor can pursue collection efforts, such as garnishing wages or placing a lien on the debtor’s property.

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What is a reaffirmation agreement and how does it work in Chapter 7 Bankruptcy?

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