Reaffirmation Agreements

A reaffirmation agreement is a contract made between a debtor and a creditor during a bankruptcy proceeding. In this agreement, the debtor agrees to continue repaying a specific debt even after the bankruptcy case is concluded. The debt remains valid and unaffected by the bankruptcy discharge, allowing the debtor to keep certain collateral, such as a car, that is tied to the debt.


As long as debtor abides by the terms of the reaffirmation agreement it is a sure way to keep your property. The creditor will mail the debtor monthly statements and report payments to the credit bureaus which will increase your credit score.


A reaffirmed debt remains your personal legal obligation to pay. The reaffirmed debt is not discharged in your bankruptcy case. That means that if you default on your reaffirmed debt after your bankruptcy case is over, the creditor may be able to take your property or your wages.

So, if you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien. The creditor can also take legal action to recover a judgment against you. The reaffirmation leaves a debtor personally liable, and can no longer just “walk away” from the debt.

UNDUE HARDSHIP to the debtor(s)?

In Arizona, a bankruptcy judge can deny a debtor’s request to reaffirm a debt if it appears that the agreement would pose an undue hardship. In fact, in 99% of instances the bankruptcy judge will find that there is a presumption of undue hardship and will not approve the reaffirmation agreement.

If a debtor does not have enough income left over, after deducting expenses, to make the required payments. In this situation, you will have to overcome the presumption of undue hardship by showing that you can afford to pay for the property.

reaffirmation agreement hearing

As part of the reaffirmation process hearing is held with the bankruptcy court. The court will approve the reaffirmation agreement only if you can demonstrate that you are financially able to make the monthly payments without it being an undue hardship.

When will the reaffirmation be effective?

If the creditor is a traditional bank, the reaffirmation agreement becomes effective when it is filed with the court unless the reaffirmation is presumed to be an undue hardship.

If the Reaffirmation Agreement is presumed to be an undue hardship, the court must review it and may set a hearing to determine whether you have rebutted the presumption of undue hardship.

How soon must a debtor decide?  

If you decide to enter into a reaffirmation agreement, you must do so before you receive your discharge. The signed agreement is to be filed with the bankruptcy court no later than 45 days after the 341 hearing, so the court will have time to schedule a hearing to approve the agreement if approval is required. However, the court may extend the time for filing, even after the 45-day period has ended.

If you need help from an Arizona bankruptcy attorney then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

The Dunaway Law Group provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice and does not create a lawyer-client or attorney-prospective client relationship. Readers should not act upon this information without seeking advice from professional advisers. Additionally, this Firm limits its practice to the states of Arizona and New York.

Author: Clint Dunaway

Arizona attorney.