What is a reaffirmation agreement in Chapter 13 Bankruptcy?

A reaffirmation agreement in Chapter 13 Bankruptcy is a contract between a debtor and creditor in which the debtor agrees to keep paying off a certain debt and the creditor agrees to keep offering goods and services to the debtor. This is different from Chapter 7 Bankruptcy, where the debtor’s debts are discharged and the creditor must accept their losses. In California, a debtor cannot enter into a reaffirmation agreement without the approval of a bankruptcy court. As part of the agreement, the creditors must provide a “disclosure statement” to the debtor. This statement explains all the terms of the agreement, including the amount of the debt, interest rate, payment schedule and any other costs associated with the debt. Before entering a reaffirmation agreement, a debtor should carefully consider their financial situation and make sure that entering the agreement is in their best interests. Additionally, debtors should take into account their ability to make the required payments in a timely manner and the potential impact a reaffirmation agreement might have on their credit score. Once the debtor and the creditor have entered into a reaffirmation agreement, the debtor is legally obligated to make the payments stipulated in the agreement. Failure to make timely payments can result in the creditor reporting the debt to the credit bureaus as delinquent, which could further damage the debtor’s credit score.

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What is a reaffirmation agreement in Chapter 13 Bankruptcy?

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