December 4, 2015
Upon completion of a Chapter 7 bankruptcy proceeding a debtor receives a discharge of his/her debts. However, there is an exception to this rule.
A reaffirmation agreement is a post petition agreement between the individual Chapter 7 debtor and a creditor in which the debtor agrees to pay a pre-petition debt to the creditor in order to retain the property subject to the creditor’s security interest. By entering into a reaffirmation agreement, the debtor now gives up the right to have the debt discharged through bankruptcy. Therefore, counsel for debtors must carefully consider whether a reaffirmation agreement is appropriate in each situation and advise clients accordingly.