What Is a Reaffirmation Agreement?

Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: During a Chapter 7 bankruptcy, you might have the option to reaffirm certain debts, like your car loan or mortgage. A reaffirmation agreement outlines the terms for payment between you and your creditor. In this article, SoloSuit explains how reaffirmation agreements work.

When you’re suffering from grave financial problems and can’t see a path to recovery, you might consider filing for Chapter 7 bankruptcy. A Chapter 7 bankruptcy will erase most of your debts, giving you a blank slate you can use to build better financial habits.

However, a Chapter 7 bankruptcy does have some significant downsides. You’ll find it very hard to obtain new credit or qualify for a mortgage for up to 10 years. Buying a new home or a car will be much more challenging, and any loans you qualify for will likely have unfavorable terms, like high interest rates.

That’s why many people who file for Chapter 7 bankruptcy use reaffirmation agreements on assets they’d like to keep, such as their vehicle and home.

Did you recently receive a debt collection notice from a collection agency? Force collectors to verify the debt with SoloSuit’s Debt Validation Letter.

How a reaffirmation agreement works

A reaffirmation agreement is a legal document between you and your creditor that reaffirms your financing terms during a bankruptcy. Rather than discharging the outstanding debt, you’ll continue to make payments according to the agreement. In exchange, you’ll retain the asset instead of giving it up during the bankruptcy.

If your loan with your creditor currently has unsatisfactory terms, you can use the reaffirmation process to negotiate new terms. For instance, you might request smaller monthly payments, a longer loan term, or a lower interest rate. The decision to accept your new terms is at your creditor’s discretion.

Once you have a reaffirmation agreement with a creditor, it becomes part of the bankruptcy process. A judge will review the reaffirmation agreement in a separate hearing. They’ll examine the terms of the deal, your current income status, and the history of missed payments.

If the judge decides you can reasonably follow the terms of the agreement without difficulty, they’ll approve the reaffirmation, and you’ll keep the asset.

Let’s consider an example.

Example: Chandra owns a 2020 Nissan Rogue and plans to file for Chapter 7 bankruptcy. Chandra wants to keep the car and believes she can keep up with the payments, which are $450 monthly. She currently earns $5,000 in gross monthly income. Chandra works with her lawyer to create a reaffirmation agreement for the auto loan. She sends it to the lender, who signs it. During the bankruptcy process, the judge holds a hearing for the reaffirmation agreement and approves the deal. Chandra gets to keep her vehicle but must stay on top of her payments until she pays off the loan.

Is a creditor suing you for an old debt? Watch the following video to learn about how you can settle your debts for good:

You have some time to change your mind after signing a reaffirmation agreement

Occasionally, people sign reaffirmation agreements and realize they won’t be able to stick with the repayment terms.

Giving up an asset you need (like your house) can be challenging, so you might be tempted to sign an agreement even though you can’t afford it. Thankfully, you have 60 days after filing a reaffirmation agreement with the court to change your mind. After 60 days, you’re stuck with the contract.

Before reaffirming a debt, it’s best to sit down with a qualified credit counselor or financial advisor who can help you decide whether keeping the asset is worthwhile. The advisor will examine your income and current expenses to determine whether you can reasonably keep up with the payments.

Remember, you’re under no obligation to sign a reaffirmation agreement. It’s usually best to hand over the asset and discharge the debt if you know you’ll have trouble repaying it.

A reaffirmation agreement allows you to keep your car or house during a bankruptcy

Reaffirmation agreements benefit you if you want to keep certain assets during bankruptcy, like a car or home. However, you’ll want to ensure your income is enough to keep up with the payments.

If you don’t repay a reaffirmed debt, the lender can seize the asset and sue you for the outstanding obligation. If it wins a judgment against you, it can garnish your wages or freeze your bank account.

Is a creditor suing you for a reaffirmed debt you stopped paying for? Settle the debt with SoloSettle’s help.

Settle with SoloSettle

Make an Offer

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.

We have answers

Join our community of over 40,000 people.

You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.

Get Started

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

Going to Court for Credit Card Debt — Key Tips

How to Negotiate Credit Card Debts

How to Settle a Credit Card Debt Lawsuit — Ultimate Guide

Get answers to these FAQs

Need more info on statutes of limitations? Read our 50-state guide.

Why do debt collectors block their phone numbers?

How long do debt collectors take to respond to debt validation letters?

What are the biggest debt collector companies in the US?

Is Zombie Debt Still a Problem in 2019?

SoloSuit FAQ

If a car is repossessed, do I still owe the debt?

Is Portfolio Recovery Associates Legit?

Is There a Judgment Against Me Without my Knowledge?

Should I File Bankruptcy Before or After a Judgment?

What is a default judgment?— What do I do?

Summoned to Court for Medical Bills — What Do I Do?

What Happens If Someone Sues You and You Have No Money?

What Happens If You Never Answer Debt Collectors?

What Happens When a Debt Is Sold to a Collection Agency

What is a Stipulated Judgment?

What is the Deadline for a Defendants Answer to Avoid a Default Judgment?

Can a Judgement Creditor Take my Car?

Can I Settle a Debt After Being Served?

Can I Stop Wage Garnishment?

Can You Appeal a Default Judgement?

Do I Need a Debt Collection Defense Attorney?

Do I Need a Payday Loans Lawyer?

Do student loans go away after 7 years? — Student Loan Debt Guide

Am I Responsible for My Spouses Medical Debt?

Should I Marry Someone With Debt?

Can a Debt Collector Leave a Voicemail?

How Does Debt Assignment Work?

What Happens If a Defendant Does Not Pay a Judgment?

How Does Debt Assignment Work?

Can You Serve Someone with a Collections Lawsuit at Their Work?

What Is a Warrant in Debt?

How Many Times Can a Judgment be Renewed in Oklahoma?

Can an Eviction Be Reversed?

Does Debt Consolidation Have Risks?

What Happens If You Avoid Getting Served Court Papers?

Does Student Debt Die With You?

Can Debt Collectors Call You at Work in Texas?

How Much Do You Have to Be in Debt to File for Chapter 7?

What Is the Statute of Limitations on Debt in Washington?

How Long Does a Judgment Last?

Can Private Disability Payments Be Garnished?

Can Debt Collectors Call From Local Numbers?

Does the Fair Credit Reporting Act Work in Florida?

The Truth: Should You Never Pay a Debt Collection Agency?

Should You Communicate with a Debt Collector in Writing or by Telephone?

Do I Need a Debt Negotiator?

What Happens After a Motion for Default Is Filed?

Can a Process Server Leave a Summons Taped to My Door?

Learn More With These Additional Resources:

Need help managing your finances? Check out these resources.

How to Make a Debt Validation Letter - The Ultimate Guide

How to Make a Motion to Compel Arbitration Without an Attorney

How to Stop Wage Garnishment — Everything You Need to Know

How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)

Defending Yourself in Court Against a Debt Collector

Tips on you can to file an FDCPA lawsuit against a debt collection agency

Advice on how to answer a summons for debt collection.

Effective strategies for how to get back on track after a debt lawsuit

New Hampshire Statute of Limitations on Debt

Sample Cease and Desist Letter Against Debt Collectors

The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah

West Virginia Statute of Limitations on Debt

What debt collectors cannot do — FDCPA explained

Defending Yourself in Court Against Debt Collector

How to Liquidate Debt

Arkansas Statute of Limitations on Debt

Youre Drowning in Debt — Heres How to Swim

Help! Im Being Sued by My Debt Collector

How to Make a Motion to Vacate Judgment

How to Answer Summons for Debt Collection in Vermont

North Dakota Statute of Limitations on Debt

ClearPoint Debt Management Review

Indiana Statute of Limitations on Debt

Oregon Eviction Laws - What They Say

CuraDebt Debt Settlement Review

How to Write a Re-Aging Debt Letter

How to Appear in Court by Phone

How to Use the Doctrine of Unclean Hands

Debt Consolidation in Eugene, Oregon

Summoned to Court for Medical Bills? What to Do Next

How to Make a Debt Settlement Agreement

Received a 3-Day Eviction Notice? Heres What to Do

How to Answer a Lawsuit for Debt Collection

Tips for Leaving the Country With Unpaid Credit Card Debt

Kansas Statute of Limitations on Debt Collection

How to File in Small Claims Court in Iowa

How to File a Civil Answer in Kings County Supreme Court

Roseland Associates Debt Consolidation Review

How to Stop a Garnishment

Debt Eraser Review

Do Debt Collectors Ever Give Up?

Can They Garnish Your Wages for Credit Card Debt?

How Often Do Credit Card Companies Sue for Non-Payment?

How Long Does a Judgement Last?

How Long Before a Creditor Can Garnish Wages?

How to Beat a Bill Collector in Court

Not sued yet?

Use our Debt Validation Letter.

Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.

Let's Do It

It only takes 15 minutes.

And 50% of our customers' cases have been dismissed in the past.

"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather