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Bankruptcy FAQ

2 things to consider about debt reaffirmation

On Behalf of | Jan 25, 2019 | Debt Relief

If you cannot sleep well at night because you spend most of the time stressing about where your next dollar is coming from or which payments to juggle so you do not fall further behind, it may be time for you to examine bankruptcy as a solution. It can eliminate your debt and help you regain your financial footing, but you may have to sacrifice some of your hard-earned possessions.

Fortunately, Chapter 7 bankruptcy allows for filers to retain certain assets if they reaffirm debts. Reaffirming a debt means you agree to pay your creditors in return for them allowing to you maintain possession of, say, your house and car. It may seem like a good idea to reaffirm some debts to avoid foreclosure and repossession. However, there are a couple of things to consider first.


Bankruptcy gives you more breathing room financially, so you no longer have to ignore certain bills and obligations. It is vital for you to develop good financial management skills to avoid this situation in the future. If you fall behind or default on any agreements you make during bankruptcy, you could lose the protections and the second chance it offers as your lien holders can move forward with foreclosure or repossession.


When you reaffirm your house or car, you must consider how much your assets are going to be worth several years later. Reaffirming requires you to reenter into a repayment contract with the lien holder. If you do not account for depreciation, you could end up paying significantly more than what your car and home are worth by the time you pay them off.

When it comes to reaffirming debts, they no longer qualify for discharge. It is essential for you to weigh the advantages to avoid issues that could make your financial situation more difficult.