During your case
What happens when you reaffirm a mortgage or car loan in bankruptcy?
When you reaffirm a mortgage or car loan, you agree to remain personally liable for a debt that would otherwise be discharged, usually so you can keep the car or other property that secures it. The agreement must be made before the discharge, be in writing and be filed with the court. You can cancel it any time before the discharge or within 60 days after it is filed with the court, whichever is later.1 2 3
Connect to a bankruptcy lawyerReaffirming is the one step in bankruptcy where you agree to keep a debt. Here is what you sign up for, what the alternatives are, and the protections the law builds in.
General information, not legal advice. Rules and amounts change; check with a lawyer or the court before you act.
In this guide
Why would anyone agree to keep a debt?
Because a discharge deals with you, not with the property. A discharge ends your personal liability for a debt, but a valid lien that was not removed in the case remains afterward. A car lender or mortgage company may still be able to take back the property that secures its loan.4 2
A reaffirmation is the lender's answer to that. You agree to stay liable and keep paying, and in return the creditor promises not to repossess the property as long as you continue to pay.2
What are your options for a car you are still paying for?
In Chapter 7, a person with debts secured by property must file a statement of intention saying what they will do with that property. The official form is Form 108, Statement of Intention for Individuals Filing Under Chapter 7.5 6
| Choice | What it means | What to weigh |
|---|---|---|
| Surrender5 4 | You give the property back to the lender | You no longer have the property, and your personal liability for the debt can be discharged |
| Redeem7 | You keep personal-use property, such as a car, by paying the lender the amount of its allowed secured claim in full at the time of redemption | It takes a single payment, and the property must be exempt or abandoned and the debt a dischargeable consumer debt |
| Reaffirm1 2 | You sign a new agreement to keep paying and keep the property | You stay personally liable, so the debt is not discharged |
The statement of intention is due 30 days after filing or on the date of the meeting of creditors, whichever is earlier, and you must then carry out your choice within 30 days after the first date set for the meeting.5
What makes a reaffirmation agreement valid?
A reaffirmation agreement counts only if it follows the rules in the Bankruptcy Code. The main ones are below.
- It is made before the discharge is granted.3
- You receive the required disclosures, which tell you the amount of the debt being reaffirmed, how it is calculated, and that your personal liability for it will not be discharged.2
- You sign a statement of your current income and expenses showing whether you can afford the payment.2
- You have not canceled it within the time the law allows.3
Does a judge have to approve it?
That depends on whether a lawyer represented you in negotiating the agreement. If one did, the lawyer must certify in writing that you were fully informed and agreed voluntarily, that the agreement will not create an undue hardship for you or your dependents, and that you were advised of its legal effect and the consequences of a default.2 3
If you had no lawyer, the court must approve the agreement, and may do so only if it does not impose an undue hardship on you or a dependent and is in your best interest. The court holds a hearing and tells you that the agreement is not required by law.3 2
Your budget matters here. If what is left of your income after expenses is not enough to make the payment, undue hardship is presumed, and the court may decide not to approve the agreement. The presumption lasts until 60 days after the agreement is filed, and you may answer it in writing by identifying additional sources of funds to make the payments.2 3
Can you change your mind after signing?
Yes, for a limited time. You can cancel a reaffirmation agreement any time before the discharge or within 60 days after it is filed with the court, whichever is later, by giving notice to the creditor. Put the notice in writing and keep a copy.3
You are also free to keep paying a debt without reaffirming it. A debtor may repay any debt voluntarily whether or not a reaffirmation agreement exists. What a car lender does in that situation depends on the lender and the loan contract, so ask before you rely on it.2 3
Is reaffirming a mortgage different?
The law treats it differently in one respect. The requirement that a court approve the agreement of a person without a lawyer does not apply to a consumer debt secured by real property, such as a home mortgage.3 2
The basic trade is the same: reaffirming puts your personal liability back on a debt the lien already secures. Whether that is worth it depends on your loan, your state and your plans for the home, so get legal advice before signing.4 2
If the real problem is missed mortgage payments, reaffirming does not fix it. Chapter 13 is the chapter that lets a homeowner catch up missed payments over time through a plan.8
What happens if you do not reaffirm your mortgage?
The discharge ends your personal liability for the loan, but the lien stays on the home. If the payments stop, the lender can still enforce the lien and foreclose.4 2
You can keep paying anyway. A debtor may voluntarily repay any discharged debt, and the discharge does not stop a lender with a mortgage on your principal residence from asking for and accepting the regular payments in the ordinary course of business instead of foreclosing.4 9 3
Federal mortgage rules keep monthly statements coming, in a modified form, while you are in bankruptcy and after your personal liability is discharged. A servicer can stop them in listed situations, for example if you ask in writing or say you will surrender the home.10
Some lenders handle a loan that was not reaffirmed differently, for example in what they report to credit bureaus or how they treat a later refinance. Ask the servicer in writing before you decide, and keep the answer.
What should you weigh before you sign?
Almost every other step in a bankruptcy case reduces what you owe. This one keeps a debt alive, by your own choice, in exchange for keeping a specific thing.
- If you fall behind later, the lender can take the property and you still owe the debt, because your personal liability was not discharged.2
Common questions
Do I have to reaffirm a debt?
No law requires you to. When a person without a lawyer wants to reaffirm, the court tells them that the agreement is not required by law. The lender keeps its lien either way, so ask the lender what it will do if you do not reaffirm.2 3 4
What happens if I don't reaffirm my mortgage?
Your personal liability is discharged but the lien stays, so the lender can foreclose if payments stop. You can keep paying voluntarily, and the discharge does not stop the lender from accepting the regular payments on your home loan.4 2 9 3
How long do I have to cancel a reaffirmation agreement?
Any time before the discharge or within 60 days after the agreement is filed with the court, whichever is later.3
Can the judge refuse to approve my agreement?
Yes. If your income after expenses is not enough to make the payment, undue hardship is presumed and the court may decide not to approve the agreement.2
Sources
Official courts & government references- Glossary of Legal Terms (uscourts.gov)
- Chapter 7 - Bankruptcy Basics (uscourts.gov)
- 11 U.S. Code § 524(c)(1), (c)(4) (Cornell LII)
- Discharge in Bankruptcy - Bankruptcy Basics (uscourts.gov)
- 11 U.S. Code § 521(a)(2) (Cornell LII)
- Bankruptcy Forms (uscourts.gov)
- 11 U.S. Code § 722 (Cornell LII)
- Chapter 13 - Bankruptcy Basics
- U.S. Trustee Program: Bankruptcy Information Sheet
- 12 CFR 1026.41 Periodic statements for residential mortgage loans (eCFR)
- 11 U.S. Code § 727(a)(8) (Cornell LII)