Reaffirming a Debt
A debtor in a bankruptcy case may decide to remain legally obligated to pay a debt that would otherwise be discharged in bankruptcy. This is called reaffirming a debt. Reaffirming a debt is voluntary; debtors are not required to reaffirm any debt. An example of a reaffirmation agreement might be the debtor's agreement to continue making payments on an auto loan after the bankruptcy discharge in return for keeping a car that would otherwise be subject to repossession.
Although the Bankruptcy Code allows debtors to reaffirm debts, the reaffirmation agreement will be enforceable only if it complies with specific provisions of 11 U.S.C. § 524(c), (d), and (k). For example, any agreement to reaffirm a dischargeable debt must be entered into before the debtor receives a discharge. A reaffirmation agreement may also be subject to court approval under certain circumstances. Major factors for approval include whether or not there is a "presumption of undue hardship" in the debtor being able to afford making the payments required by the agreement, and whether certain disclosures have been made by the creditor and understood by the debtor. The court may require that the debtor appear at a hearing on whether reaffirming a particular debt is in the debtor's best interest.
Video: Discussion of Reaffirmation
Forms
The Judicial Conference has promulgated certain forms to ensure that the statutory disclosures have been made and that certain information is available for the court to consider. Official Form 427 - Cover Sheet for Reaffirmation Agreement - is mandatory. Form 2400A - Reaffirmation Documents, which includes sections for the agreement, disclosures, and required debtor's statement and certifications, is not mandatory but its use is recommended. Make sure to review the instructions for Form 2400A. An alternate version of the reaffirmation documents, 2400A/B ALT, also is available.
Cover Sheet for Reaffirmation Agreement (427)
Reaffirmation Documents (2400A)