A reaffirmation is a voluntary agreement, between a debtor and
a creditor that the debtor will pay all or a portion of an otherwise
dischargeable debt after the debtor has filed bankruptcy. To be
valid, the debtor must fully understand the fact that it would
be entitled to discharge of this indebtedness when and if a discharge
is granted in the bankruptcy proceedings, but wishes to repay the
debt in return for additional consideration offered by a creditor.
Creditors should be aware that:
A written agreement to reaffirm a debt must be filed with the
Bankruptcy Court, and reaffirmation agreements are subject to
The reaffirmation agreement must contain a clear and conspicuous
statement that advises the debtor that the agreement is not required
under U.S. bankruptcy law.
A reaffirmation agreement is required to be a voluntary contract.
The automatic stay provisions prohibit creditors from coercing
a debtor to reaffirm any pre-petition debt.
The reaffirmation agreement must be signed prior to discharge
of the bankruptcy in order to be enforceable.
The debtor must be notified that the agreement may be rescinded
by giving notice to the creditor any time prior to the bankruptcy
discharge, or within sixty days after the agreement is filed
with the Court, whichever is later.
The attorney for the debtor must file an affidavit certifying
that the agreement represents a fully informed and voluntary
agreement. [If an attorney does not represent the debtor, the
Court must approve the reaffirmation agreement after proper
disclosures to the debtor, and only if the Court finds that
is in the best interest of the debtor].
Form B240 is the Reaffirmation Agreement that creditors can
present to debtors in a bankruptcy case.
One final comment: The information provided above provides an
overview of one part of the U.S. Bankruptcy Code. It is not a substitute
for professional legal advice. If you have questions or need further
information as to how the bankruptcy laws apply to a specific situation,
you should consult with your lawyer.