Bankruptcy FAQ

What is a Reaffirmation Agreement?


A reaffirmation agreement is an agreement by which a bankruptcy debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. Such an agreement must generally be filed within sixty (60) days after the first date set for the meeting of creditors.

An original and executed reaffirmation agreement filed with the Clerk no later than 30 days following entry of the discharge order is enforceable without hearing or court order, if the agreement is accompanied by a declaration or an affidavit of the debtor's attorney. The reaffirmation agreement must be filed on form 240. If a reaffirmation agreement is filed without an attorney's declaration or affidavit, or creates a presumption of undue hardship, a hearing is required. You must appear in person at the hearing. The judge will ask you questions to determine whether the reaffirmation agreement imposes an undue burden on you or your dependents and whether it is in your best interests. Reaffirmed debts are not dischargeable.

Reaffirmation agreements are strictly voluntary. They are not required by the Bankruptcy Code or other state or federal law. You can voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be valid reasons for wanting to reaffirm a particular debt.

Since a reaffirmation agreement takes away some of the effectiveness of your discharge, legal counsel is advisable before agreeing to a reaffirmation.

Mar 3, 2012 10:47 AM

How Long Does a Bankruptcy Remain on My Credit Report?


The bankruptcy court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act, 6 United States Code Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed. Other bad credit information is removed after seven years. 

The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus is to remove chapter 11 and chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters.

Mar 3, 2012 10:47 AM

What Debts Cannot Be Discharged in Bankruptcy?


Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders.11 U.S.C. § 523(a). 

The debtor will continue to be liable for these types of debts to the extent that they are not paid in the chapter 11 case. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 11 U.S.C. § 523(c); Fed. R. Bankr. P. 4007(c).

Mar 3, 2012 10:47 AM
© Alex J. Llorente  2012