Glossary term
Reaffirmation Agreement
Short answer
A reaffirmation agreement is a voluntary contract signed during a bankruptcy case — most often Chapter 7 — in which the filer agrees to remain personally liable on a specific debt, usually a secured one like a car loan, even though the discharge would otherwise wipe that liability out.
Why it matters
Reaffirming is how some filers keep financed property on the original loan terms, and lenders sometimes require it to continue the relationship. The cost is real: the reaffirmed debt survives bankruptcy completely, so a later default can mean repossession plus a lawsuit for the deficiency — exactly the outcome the discharge existed to prevent. Because of that risk, reaffirmations go through a formal process with attorney certification or court review, and they can generally be rescinded within a limited window after signing. Whether reaffirming, surrendering, or another arrangement fits a given case is a strategy question squarely for a bankruptcy attorney.
Example
During his Chapter 7 case, Devon reaffirms his $9,000 car loan so he can keep the car he needs for work. Two years later he loses that job and defaults. The lender repossesses the car, sells it for $5,500, and sues him for the shortfall — a debt his discharge would have eliminated if he hadn't reaffirmed. His neighbor made the opposite choice, surrendered her car in bankruptcy, and owed nothing after.
Terms used on this page
Guides that use this term
- Chapter 7 Bankruptcy, ExplainedHow Chapter 7 bankruptcy generally works — eligibility and the means test, the process from credit counseling to discharge, exemptions, costs, and credit impact.
- Rebuilding Credit After Bankruptcy: A Realistic RoadmapWhat actually rebuilds credit after bankruptcy — verifying your reports post-discharge, adding positive history safely, honest timelines, and offers to avoid.
- Chapter 7 vs. Chapter 13: The Honest ComparisonChapter 7 and Chapter 13 bankruptcy compared side by side — duration, cost, income rules, property treatment, foreclosure help, and credit reporting differences.
Sources
This page is based on the following official and authoritative sources. Always check the source itself for the most current rules.
Educational information — not advice
This topic involves court deadlines and rights you can permanently lose.
This page provides general educational information about credit, debt, and consumer protections. It is not legal advice, financial advice, or credit repair services, and reading it does not create any professional relationship. Laws, procedures, deadlines, and dollar amounts vary by state and change over time.
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