Glossary term
Reaffirmation Agreement: Still Liable
Short answer
A reaffirmation agreement is a promise you sign during a bankruptcy case. It says you will keep paying a specific debt, even though bankruptcy would otherwise wipe it out. It's most common in Chapter 7 cases, usually for a secured debt like a car loan.
Why it matters
Reaffirming lets some filers keep financed property on the original loan terms. Lenders sometimes require it if they want to keep financing the property.
The cost is real: a reaffirmed debt survives bankruptcy completely. If the filer falls behind later, the lender can repossess the property and then sue for whatever balance is left. That is the exact outcome the discharge was supposed to prevent.
Because that risk is real, reaffirmations go through a formal process. The process needs either attorney certification or court review. Filers can generally cancel a reaffirmation within a limited window after signing. Deciding whether to reaffirm, surrender the property, or try another option is a strategy question for a bankruptcy attorney.
Example
During his Chapter 7 case, Devon reaffirms his $9,000 car loan so he can keep the car he needs for work. Two years later, he loses that job and stops paying. The lender repossesses the car and sells it for $5,500. It then sues him for the difference — a debt his discharge would have wiped out if he hadn't reaffirmed.
His neighbor made the opposite choice. She surrendered her car in bankruptcy and owed nothing afterward.
Terms used on this page
Guides that use this term
- Chapter 7 Bankruptcy, ExplainedHow Chapter 7 bankruptcy generally works: eligibility and the means test, credit counseling through discharge, exemptions, costs, and credit impact.
- Rebuilding Credit After BankruptcyWhat actually rebuilds credit after bankruptcy — verifying your reports post-discharge, adding positive history safely, honest timelines, and offers to avoid.
- Chapter 7 vs. Chapter 13, ComparedChapter 7 and Chapter 13 bankruptcy compared side by side: duration, cost, income rules, property treatment, and credit-reporting differences.
Sources
This page is based on the following official and authoritative sources. Always check the source itself for the most current rules.
Educational information — not advice
This topic involves court deadlines and rights you can permanently lose.
This page provides general educational information about credit, debt, and consumer protections. It is not legal advice, financial advice, or credit repair services, and reading it does not create any professional relationship. Laws, procedures, deadlines, and dollar amounts vary by state and change over time.
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