Rules on Reaffirmation Agreements

When filing for bankruptcy, it is essential to know the rules and regulations regarding reaffirmation agreements. A reaffirmation agreement is a legal document that reaffirms your commitment to repay a particular debt, even after filing for bankruptcy.

Reaffirmation agreements are not mandatory, meaning that you have a choice to not reaffirm any debts. However, in some cases, they can be beneficial to the debtor, especially if they wish to keep their property and continue making payments on the debts secured by the property.

Here are some important rules on reaffirmation agreements that you should be aware of:

1. The reaffirmation agreement must be voluntary

The law requires that a reaffirmation agreement must be made voluntarily and not under coercion or duress. Therefore, a creditor cannot force a debtor to sign a reaffirmation agreement. However, a creditor may refuse to extend credit to a debtor who declines to sign one.

2. The reaffirmation agreement must be in writing

A reaffirmation agreement must be in writing, signed by both parties, and filed with the bankruptcy court. The court will review the agreement to ensure that the debtor understands the terms of the agreement, the benefits and risks involved, and that it is in the best interest of the debtor.

3. The reaffirmation agreement must be approved by the court

The court must approve the reaffirmation agreement for it to be valid. The court will consider various factors, such as whether the debtor can afford to make the payments, whether the agreement is in the best interest of the debtor, and whether the creditor is charging reasonable interest rates and fees.

4. The reaffirmation agreement must be filed before the discharge is granted

A reaffirmation agreement must be filed with the court before the discharge is granted. Failure to do so may result in the discharge of the debt, and the creditor will not have the legal right to collect on the debt.

5. The reaffirmation agreement can be canceled

A debtor has the right to cancel a reaffirmation agreement at any time before the discharge is granted or within 60 days after signing the agreement, whichever is later. The debtor must provide written notice to the creditor and the court of their intention to cancel the agreement.

In conclusion, reaffirmation agreements can be a helpful tool in bankruptcy, but it is essential to follow the rules and regulations to ensure that your rights are protected. It is always recommended to consult with an experienced bankruptcy attorney to guide you through the process and help you make the best decisions for your financial future.