Understanding reaffirmation agreements is key to a Chapter 7 bankruptcy case in Michigan. What is it? Should you enter into one? Read more below and contact Downriver bankruptcy specialists at The Mitten Law Firm today.

What is a Reaffirmation Agreement in Michigan Bankruptcy?

A reaffirmation agreement in bankruptcy is a voluntary agreement between a Chapter 7 bankruptcy filer and a creditor. The agreement asserts that the debt to the creditor will not be discharged. In other words, you as a debtor are agreeing to pay back the money you owe to the creditor.

By reaffirming a debt, the debtor promises to repay the debt even though they would not be required to do so and the creditor agrees not to take actions such as repossessing a car or a house as long as the debtor continues making the payments.

When dealing with creditors, you may have often agreed to informal “promise to pay” arrangements. These, while not legal motions, essentially have the same effect. The company or creditor agrees not to report you to credit bureaus or file a lawsuit, so long as you have made the promise to pay, and have actually paid.

Why Would I Reaffirm Debt in a Michigan Chapter 7 Bankruptcy?

Most of the time, it does not make any sense to reaffirm a debt when you are in Chapter 7 bankruptcy proceedings. However in some cases, most often with a car loan or a house, you may want to reaffirm the debt in order to keep the property. Some reaffirmation agreements allow a modification of the debt as well, but not always.

Remember, in most debts, it is to the creditor’s advantage to get you to sign an agreement like this. It is VERY important to not enter into a reaffirmation agreement for a debt you know you will not be able to pay back.

What Are The Rules For Filing a Debt Reaffirmation in Bankruptcy Cases?

A reaffirmation must be filed before the entry of your discharge and no later than 60 days after the date of your first meeting of creditors. You may be able to extend the dealing by filing a request to the court, but you must file the motion before the discharge is entered.

You may rescind a reaffirmation agreement (change your mind) but it must happen before the entry of discharge or  before the expiration of the 60-day period after the date the agreement was filed, whichever comes first.

Before signing ANY agreement with a creditor, contact a Downriver bankruptcy attorney at The Mitten Law Firm.