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Reaffirmation (Bankruptcy): A Comprehensive Guide to Your Options
Definition & Meaning
A reaffirmation agreement is a legal document that allows a person who has filed for bankruptcy to agree to repay a specific debt that would normally be eliminated through the bankruptcy process. This agreement is typically used for debts like car loans, where the debtor wishes to keep the asset while continuing to make payments. By signing a reaffirmation agreement, the debtor commits to paying all or part of the debt, and this agreement must be filed with the bankruptcy court to be enforceable.
Table of content
Legal Use & context
Reaffirmation agreements are primarily used in bankruptcy law. They are relevant in Chapter 7 and Chapter 13 bankruptcy cases, where individuals may choose to retain certain assets while discharging other debts. The agreements require careful consideration and legal advice to ensure that the debtor understands the implications, including the potential for continued liability for the debt after bankruptcy. Users can manage reaffirmation agreements through legal templates available from US Legal Forms, which are drafted by experienced attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A debtor files for Chapter 7 bankruptcy and wishes to keep their car. They sign a reaffirmation agreement with the lender, agreeing to continue making monthly payments to retain ownership of the vehicle.
Example 2: A person in Chapter 13 bankruptcy wants to keep their home. They may enter into a reaffirmation agreement regarding the mortgage, committing to pay the outstanding balance while restructuring their other debts. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Reaffirmation Process
California
Requires a hearing for reaffirmation agreements in most cases.
Texas
Allows reaffirmation agreements but has specific forms that must be used.
Florida
Reaffirmation is common, but debtors must ensure they understand the risks involved.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Reaffirmation Agreement
A commitment to repay a debt after bankruptcy.
Discharge
The elimination of a debtor's obligation to pay certain debts.
Redemption
A process where a debtor pays the current value of collateral to keep it, rather than continuing payments.
Common misunderstandings
What to do if this term applies to you
If you are considering a reaffirmation agreement, it is crucial to seek legal advice to understand the implications fully. You can explore ready-to-use legal form templates from US Legal Forms to assist you in preparing the necessary documents. If your situation is complex, consulting a legal professional may be the best course of action.
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