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What Is a Reaffirmation Agreement in a Chapter 7 Case?

Serving Families Throughout Mobile

In a Chapter 7 bankruptcy case, a reaffirmation agreement is a legally binding agreement between the debtor and a creditor, in which the debtor agrees to repay a debt that would otherwise be discharged in the bankruptcy case. The court must approve a reaffirmation agreement before it can become legally binding.

What Kinds of Cases Can Reaffirmation Agreements Apply To?

Reaffirmation only applies in Chapter 7 cases and NOT in Chapter 13 cases where there is a payment plan. Reaffirmation agreements are usually only appropriate for secured debts such as a mortgage loan or auto loan.

What Do I Need to Do to Get a Chapter 7 Reaffirmation Agreement Approved?

To approve a Chapter 7 reaffirmation agreement, the court must find that:

  • The reaffirmation agreement is voluntary and not made under duress or coercion
  • The reaffirmation agreement is in the debtor's best interest
  • The debtor has the ability to make the payments required by the reaffirmation agreement without undue hardship
  • The reaffirmation agreement does not violate any applicable law or public policy.

Additionally, if the debt being reaffirmed is secured by collateral, the court must also find that the creditor's lien on the collateral is valid and enforceable and that the debtor is adequately protected against any potential default on the reaffirmed debt.

The Approval Process

The debtor and creditor must file a signed reaffirmation agreement with the court, and the court will hold a hearing to review and approve the agreement. The debtor may be required to appear in person at the hearing to testify under oath that the reaffirmation agreement meets the requirements set forth by law.

Do you have questions about the process of securing a reaffirmation agreement in the state of Alabama? Call Ryan Legal Services, Inc. at (251) 241-5234 today for professional assistance!