What Does Reaffirmation of Debt Mean?

Sarah Edwards | February 24, 2023

Edited by Hannah Locklear

People who file for bankruptcy are typically in extreme financial distress. They may be unable to work, facing significant medical debts, or dealing with a substantial reduction of their ordinary income. Usually, an individual in bankruptcy sees no way out of their current situation aside from completely eliminating their debts.

Individuals can file for two forms of bankruptcy — either Chapter 7 or Chapter 13. Under a Chapter 7 bankruptcy, the court discharges all of an individual’s unsecured debts. However, they may lose their home, vehicle, or other property, depending on the circumstances.

A Chapter 13 bankruptcy is a reorganization of existing debts. People who file for a Chapter 13 bankruptcy either don’t meet the financial requirements of a Chapter 7 bankruptcy or may want to keep the property they own from their creditors.

A debt reaffirmation can help people who file for a Chapter 7 bankruptcy keep their property, like their homes and vehicles, if they still have an outstanding mortgage or car loan.

What does a reaffirmation of debt do?

A reaffirmation of debt is an agreement between an individual filing for Chapter 7 bankruptcy and their creditors, under which the individual keeps the loan out of the bankruptcy process and agrees to fulfill their repayment obligations according to the original loan contract.

Essentially, the borrower notifies the creditor that they are filing for a Chapter 7 bankruptcy but want to keep the specific loan out of the legal process. They’ll provide a reaffirmation of debt to the creditor, reestablishing their agreement to pay the loan.

If the creditor agrees to the debt reaffirmation, the borrower will keep any secured property from the loan, like their vehicle or home. They must continue to make timely payments to the lender, and should they fail to act per their agreement, the creditor may sue them to seize the property and collect the remaining loan balance.

Who should file a reaffirmation of debt?

A reaffirmation of debt is helpful for individuals filing for bankruptcy who don’t want to lose their home or car. By filing a reaffirmation of debt, they can continue to make regular payments without fear of losing their residence or vehicle in the Chapter 7 bankruptcy process.

People who don’t have another place to live or require a vehicle for transportation should file a Reaffirmation Agreement, but before doing so, they should ensure they have the financial means to continue making regular payments to their lender.

If the filer doesn’t believe they’ll be able to keep up with their payments, they should not file a debt reaffirmation. Instead, finding another place to live or a vehicle that aligns with their financial means is best.

What are the benefits of a reaffirmation of debt?

There are several benefits to reaffirming a debt.

First, you’ll be able to keep the property you have for your personal needs. You won’t need to look for another place to live or a car to drive, and as you continue to make payments, you’ll build up more equity in the property.

You’ll improve your credit score by making regular, timely payments on reaffirmed loans. Improving your credit score is a significant benefit since your credit report will take a considerable beating in the first few years following a bankruptcy.

Finally, a reaffirmation of debt ensures that your creditors can’t seize your property following the discharge of your bankruptcy. Since you voluntarily reaffirmed your debt, there’s nothing that allows them to do so as long as you keep making your payments on time.

What are the disadvantages of a reaffirmation of debt?

The main drawback of reaffirming debt is that you will remain liable for the loan, even after bankruptcy. If something happens and you can’t abide by the loan terms, the creditor can seize your property and sue you for the remaining balance.

Individuals who file for bankruptcy cannot file for a second bankruptcy in a set period, so you’ll have little defense against the creditor if you cannot make payments. Your creditors will likely be able to obtain a judgment against you, garnishing your wages or freezing your bank account. They’ll also be able to take your property.

What does a reaffirmation of debt include?

A reaffirmation of debt is a simple agreement between you and your lender. In the document, you agree to be fully liable for repaying the obligation. Typically, the amount you owe remains the same, regardless of your bankruptcy status.

In return for the debt reaffirmation, the lender agrees to allow you to keep your property as long as you continue making your payments.

How to respond to debt collectors

If you have debt collectors breathing down your neck, you’re not alone.

Millions of Americans have their debt accounts sent to collections each year. The trick is to know how to respond when a debt collector contacts you or takes you to court.

Here are some ways to respond to debt collectors to get them off your back:

• Send a Debt Validation Letter. When a debt collector first reaches out, you should respond by requesting that they verify the debt. You can do this by sending a Debt Validation Letter. This forces the collector to prove the debt is legitimate. They must verify that the amount is correct, that you actually owe the debt, and that they have rights to collect it from you. If they cannot validate the debt, they should cease contact until they do.


• Respond to a debt lawsuit lawsuit. If you’ve been sued by a debt collector, don’t lose hope. You can increase the chances of winning your case by simply responding. Respond to a debt collection lawsuit by filing a written Answer with the court and sending a copy to the opposing attorney. In your Answer, respond to each claim against you and assert your affirmative defenses. Be sure to file your Answer before your state’s deadline to avoid losing by default judgment.


• Settle your debt. If you know you owe the debt in question, you can reach out to the collector at any stage of the collection process to negotiate a settlement offer. Most debt collectors are willing to settle for less than you originally owed. Send an offer for free with SoloSettle, after filing your Answer into the case, to start the settlement negotiations process.

SoloSuit can help you draft each of these documents and beat debt collectors at their own game. Check out this video to learn more:

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What is SoloSuit?

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You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

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