What is a reaffirmation agreement in Chapter 13 Bankruptcy?

A reaffirmation agreement in Chapter 13 Bankruptcy is a legally binding contract between a debtor and a creditor in which the debtor agrees to repay a debt to the creditor even though they could have discharged the debt in a Chapter 13 Bankruptcy. By signing a reaffirmation agreement, the debtor is promising to pay all or a portion of the debt even after a bankruptcy is filed. Reaffirmation agreements can be a great way for debtors to keep certain debts that would otherwise be discharged in a Chapter 13 Bankruptcy. This is especially beneficial for debtors who want to keep a certain asset, such as a car or home, secured by collateral. By renegotiating the payment terms with the creditor, the debtor can keep their asset and avoid repossession. A reaffirmation agreement must be filed with the bankruptcy court and approved by the court before it is valid. The court must find that the agreement is in the best interests of the debtor and will not create an undue hardship. The court also must find that the terms of the agreement are fair and reasonable to both the creditor and the debtor. In Washington state, there is an additional requirement that the debtor must be advised and represented by a lawyer before the agreement is entered into or it is invalid. This requirement is to ensure that debtors understand the risks and obligations associated with a reaffirmation agreement. Reaffirmation agreements can be a great way for debtors to keep certain debts that they may want to keep even after filing for bankruptcy. However, debtors should always be aware of all of the risks and obligations associated with a reaffirmation agreement before entering into one.

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What is a reaffirmation agreement in Chapter 13 Bankruptcy?

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