A reaffirmation is a document that you and a creditor and your attorney sign in a Chapter 7 bankruptcy proceeding that makes your personal liability survive a Chapter 7 discharge.
Why should I sign a reaffirmation?
You should consider the following factors in deciding whether or not to sign a reaffirmation:
1. Do you want the debt to survive?
2. Can you afford to pay the debt?
When to sign a reaffirmation
The reaffirmation form is prescribed by the United States Bankruptcy Code. It is 7-10 pages long. Normally your attorney will advise you to sign a reaffirmation when
1. You are current on a debt for a secured item such as a car, that is worth what you owe on it and
2. Your regular expenses leave an amount left over that is in your bankruptcy budget so you can afford to pay it.
3. You will be able to pay the debt in full amount reaffirmed and
4. It is not an undue hardship on you.
When you may not want to sign a reaffirmation
Signing a reaffirmation requires that your attorney sign it also, stating that in his or her opinion it is not an undue hardship on you. So discuss this with your attorney. Be aware that:
a. Signing a reaffirmation on an unsecured debt of any size is not usually done.
b. Reaffirming a debt because a creditor threatens to object to your discharge is rarely done: often creditors try to bully you and your attorney on credit card debts claiming some kind of bogus "fraud" or "use with no intent or ability to repay" Meet with your attorney and make sure that they are not advising you to sign such a reaffirmation when you can easily refuse to sign it and get a discharge. Many of these threats from credit card companies are bogus.
Reaffirming if you don't have an attorney or if your attorney feels reaffirming is an undue hardship
If you filed a bankruptcy without an attorney, you may still reaffirm if you file the reaffirmation, the Court sets a hearing, and approves it. The same applies if your attorney fees that signing it would be an undue hardship on you but you have a good reason to sign it and you can pay the reaffirmation amount.