Yes, this means that the creditor is asking that the debtor pay the
debt anyway, even though it is eligible to be discharged in bankruptcy.
A debtor may be willing to do this if there is a co-signer or guarantor
of the debt (such as a family member, friend or employer) that the
debtor does not wish to leave saddled with the debt. Also, a debtor may
want to reaffirm a debt in order to avoid having a secured creditor
take the collateral securing the debt. A creditor may also ask a debtor
to reaffirm the debt before he (the creditor) will agree to do business
with the debtor again. This only applies in Chapter 7 consumer
bankruptcy. This will not usually happen in a business Chapter 7.
The
decision to reaffirm a debt is voluntary; no law requires the debtor to
do it. The debtor can also choose to pay a debt that has been
discharged in bankruptcy without reaffirming the debt, which means that
the lender has no legal rights to collect the debt. Reaffirmation
agreements can't impose an undue burden on you or your dependents and
must be in your best interest.
A debt is reaffirmed in an
agreement filed with the court within 60 days after the first meeting
of the creditors in the bankruptcy case, also called the 341 meeting.
Once you sign a reaffirmation agreement you have 60 days or until the
judge issues the discharge order in your bankruptcy case to cancel the
agreement.
It is important to remember that a reaffirmed debt is
not wiped out (discharged) in bankruptcy. Once your bankruptcy order is
filed and the debt is reaffirmed, you must pay the debt. If you don't,
the creditor can sue you for the balance owed or repossess the property
in a secured debt.
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