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Debt reaffirmation after bankruptcy

On Behalf of | May 24, 2018 | Bankruptcy, Bankruptcy |

If you’ve found yourself in financial trouble, bankruptcy might be the best option. At that point, however, you’re bound to be asked whether or not you intend to reaffirm any of your old debts.

What’s debt reaffirmation? It’s basically an agreement to repay an old debt, despite the bankruptcy. If you do that, you’ll retain the debt throughout the process and lose any protections against collection normally afforded by the bankruptcy.

Why would anyone do something like that? Most of the time, people reaffirm debts on something they hope to keep in order to make it easier to start over — like their house or car.

Reaffirming a debt on a home or car may not be the best idea anyone ever had — but it might not be the worst, either. A lot of it depends on your situation.

Before you reaffirm any of your debts, take an honest look at your financial situation and the debt you’re thinking about reaffirming. Ask yourself the following questions before you make any kind of agreement:

1. Do you have a good deal on whatever it is?

If you’re paying on a home or car that’s upside-down in debt, it might not be worth reaffirming the obligation. You’ll be throwing good money after bad.

2. Do you even need to reaffirm the debt?

Some banks won’t ask you to reaffirm your debt as long as you keep paying the loan. Cars and houses are a lot of work for banks to repossess and sell again, so the bank may be happy to let you carry on if you’re current on those payments.

3. Can you afford the payments?

If you’re in the bankruptcy because you had a period of unemployment that’s now in the past or you simply got in over your head, you may be able to easily afford the car loan or mortgage payment without the credit card bills on top of them. On the other hand, if your economic troubles are long-term or the payments are simply too high, reaffirmation doesn’t make any sense.

It’s difficult to know what to do when you’re in bankruptcy and presented with a lot of choices — which is why it’s smart to take a breath and get some advice before you decide.

Source:, “What is debt reaffirmation?,” Dana Dratch, accessed April 26, 2018


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