Submitted by Attorney Charles B. Sellers

When a person files personal bankruptcy, they do so with the expectation that many, if not most of the prior debts will be taken care of in that bankruptcy and are no longer a concern.  To the surprise of some, a person may still receive communication from their lender in the form of a document entitled “reaffirmation agreement”, even though they have already filed for bankruptcy protection.

A reaffirmation agreement is a contract between the person that has filed bankruptcy and the former creditor.  The purpose of the agreement is to confirm that the filer agrees to pay the debt (or renews the obligation) after the bankruptcy according to specified terms, even though that debt would otherwise be discharged by the filing.

Because a bankruptcy discharge is of such critical importance, the Bankruptcy Code requires that several conditions be satisfied in order for the agreement to valid, as outlined in Section 524(c) and (d).

Some of the important conditions that must be satisfied involve:

 1.  The agreement must be entered into between the parties before the discharge is granted and filed with the court,

 2.  The agreement must provide notice that it is subject to rescission at any time by the filer before the discharge is granted or within 60 days of the agreement being filed with the court, whichever is later,

 3.  If the person filing bankruptcy is represented by an attorney, a declaration by the attorney will state that the filer’s consent is informed, voluntary, and that it does not impose any undue hardship on the person filing or their dependents,


4.  If the attorney does not sign and file a declaration (as there are certain circumstances where it is recommended that they do not) or if the filer is not represented by an attorney, then the agreement must receive court approval by the judge upon determining that the agreement does not impose an undue hardship on the filer or their dependents and is in the best interest of the filer.

 When a reaffirmation agreement is properly executed and validly filed with the court, it has the effect of excepting the reaffirmed debt from any issued discharge order by the bankruptcy court.

 For a full listing of all considerations that must be satisfied in order to effect a valid reaffirmation agreement, please contact a bankruptcy attorney.

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