Which Reaffirmation Are Binding?

We had discussed the definition of ‘surrender’ and ‘reaffirmation’. In this post, we would only discuss reaffirmation. Some time creditors lure the debtors to sign reaffirmation with various tactics like lowering the interest rate, shortening time period etc. The Code does not completely bar reaffirmation, it however, restricts them significantly. Section 524(c) and (k) sets forth a number of requirements that must be followed before a reaffirmation is binding. First, there must be an agreement between the debtor and the creditor which is enforceable under applicable nonbankruptcy law. that agreement in most cases is essentially a contract to reaffirm. Simply speaking,without any agreement there can be no reaffirmation. As you know, the reaffirmation agreement alters the original agreement. Any reaffirmation has to pass through a series of filtration process and must be approved by the judge and the parties.

1. The reaffirmation agreement must be made prior to the discharge.
2. The attorney has informed his parties not to enter into any reaffirmation.
3. Once the discharge is entered, no reaffirmation is possible
4. The reaffirmation agreement must contain the disclosures described in section 524(k).
5. The disclosure must be clear and conspicuous.

Part B of the of the agreement must include a brief description of the credit agreement, a task that may not be easy in light of the complicated agreements utilized by consumer creditors. The agreement must be filed by the court. If an attorney ahs negotiated the reaffirmation, the agreement filed with the court must be accompanied by the attorney’s affidavit.


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