What Is a Reaffirmation Agreement and Do I Have to Sign It?

When you file bankruptcy, any creditor who has a lien on your property…such as an auto lender or mortgage holder… can ask you to sign what is known as a Reaffirmation Agreement.

You have no legal obligation to sign a reaffirmation agreement. If you do sign the agreement, you are waiving your discharge with respect to this debt and, if in the future you are unable to pay this loan, the lender can continue to pursue you personally.

If you choose to not sign the reaffirmation agreement you will be discharged from all personal liability on this debt. However, if you wish to retain the secured property (your car, your home), you will have to continue making payments, and since you probably indicated in your bankruptcy filing ( in your “Statement of Intentions”) that you intend to reaffirm this debt, there is some risk that not entering it might result in the creditor filing a motion with the Court to compel you to reaffirm. For your attorney to assist in such proceeding might require additional legal fees, depending on what you agreed to with your counsel.

You have the option of attempting to complete this reaffirmation agreement and returning it to the creditor on your own. If our clients choose to do so we provide them instructions. But if they proceed on your own, they must reflect on the reaffirmation documents that they are NOT represented by counsel in the preparation of this agreement. In many bankruptcy districts, the Court then requires them to attend a hearing ( on their own, since they stated that they are not represented in this matter) to explain why the reaffirming of this debt is not a hardship to them.

When you are getting ready to file bankruptcy, remember to discuss the implications of reaffirmation agreements before you proceed.