Bankruptcy & Reaffirmation Agreement FAQ's

Reaffirmation agreements are used in cases where a bankruptcy petitioner wants to maintain liability for a debt through a bankruptcy. Usually this is done to prevent secured property from liquidation.

The following are frequently asked questions about reaffirmation agreements:

1. When do you need to enter into and file a reaffirmation agreement?

If a debtor decides to sign a reaffirmation agreement, s/he must do so before bankruptcy discharge. A reaffirmation agreement may be signed between debtor and creditor at the time of a 341 hearing or after the petition filing.

2. Is the reaffirmation agreement filed with the bankruptcy court?

After a debtor and a creditor sign a reaffirmation agreement, either the debtor or creditor files the agreement with the court. The court schedules a hearing to approve the agreement. In trustee offices, there are usually signs warning that reaffirmation agreements need court approval.

3. Can a debtor cancel a reaffirmation agreement after signing?

A debtor may cancel a reaffirmation agreement before the bankruptcy court enters a discharge. To cancel a reaffirmation agreement, a debtor notifies the creditor that a reaffirmation agreement is canceled.

4. Does contract law apply to reaffirmation agreements?

Yes. There cannot be a binding reaffirmation agreement unless the parties actually reach a meeting of the minds, and unless the parties share a common understanding about the terms and intend to be bound to those terms, there cannot be an enforceable agreement.

5. Can the parties agree to any terms in a reaffirmation agreement?

Freedom of contract has its limits. Although parties are allowed to make agreements under any terms upon, reaffirmation agreements against public policy will not be enforced.

6. Does the small print matter?

Creditors will sometimes use the same generic language and say it is standard. The order of the exchange, subject matter of the terms and the size and font of the type face can affect which terms will be enforced.