What is a Reaffirmation Hearing for in Bankruptcy?

In bankruptcy, reaffirmation agreements and hearings refer to new agreements between debtors and creditors.  Some attorneys advise against these agreements because it prevents the debtor from having a complete “fresh start.”  However, even if the debtor signs a reaffirmation agreement, the debtor has 60 days (after filed with the court or from discharge date) to change his or her mind.

Reaffirmation Agreement

Under reaffirmation agreements, the debtor elects to become liable for all or part of a debt that would otherwise be discharged in bankruptcy.  While the debtor reaffirms his or her obligation to pay on the debt, the creditor promises that it will not take the secured property back (repossess) as long as the debtor continues repaying the debt.

If the debtor chooses to reaffirm, the debtor must reaffirm before the discharge is granted.  The reaffirmation agreement needs to be signed by the debtor and filed with the bankruptcy court.  The reaffirmation must contain a long list of disclosure as required by the Bankruptcy Code.  The disclosures include advising the debtor of the debt amount and that this reaffirmed liability will not be discharged in bankruptcy.  The agreement must also prove that the debtor will not suffer undue hardship.

Reaffirmation Hearing

If the debtor has an attorney for the reaffirmation agreement, the attorney must certify in writing that the attorney explained the agreement’s consequences to the debtor, including potential default.  The attorney must certify that he or she fully informed the debtor, the debtor voluntarily made the agreement, and that the agreement will not cause any undue hardship.

If, however, the debtor did not have a lawyer during the reaffirmation agreement (or if the court did not approve the agreement), the court will hold a reaffirmation hearing.  During the hearing, the court will make disclosure to the debtor.  As long as the agreement is in the debtor’s best interest and there is no undue hardship, the court will approve the agreement.

Importance of Consulting with an Attorney

If you would like more information regarding reaffirmation hearings, or bankruptcy laws and procedures, consult with a qualified attorney in your area.  A skilled bankruptcy attorney will help guide you through the procedures and ensure your rights are protected.