Reaffirmation Agreement

Reaffirmation Agreement

Drafts a court-ready reaffirmation agreement allowing a debtor to retain secured collateral by voluntarily reaffirming a dischargeable debt under 11 U.S.C. § 524(c). Must comply with Bankruptcy Rule 4008 and Official Form 240A.

Prerequisites

Collect before drafting:

1. Parties — debtor/creditor legal names, addresses, case number, chapter filed
2. Original loan — date, principal, interest rate, payment amount/frequency, maturity
3. Current status — outstanding balance (principal + accrued interest + fees), payment history, default status
4. Collateral — description, current fair market value, lien position
5. Modified terms (if any) — reduced rate, extended term, principal reduction
6. Schedule I and J — debtor's current income and expenses for undue hardship analysis
7. Representation status — whether debtor has counsel (determines court approval requirement)

Document Structure

Part A: Agreement Summary

Present as a table:

Part B: The Agreement

1. Party identification — full legal names, addresses
2. Original loan terms — date, principal, rate, payment, frequency, maturity
3. Reaffirmed terms — state whether original or modified terms apply
4. If modified, include side-by-side comparison:

Part C: Debtor Certification

Debtor certifies under penalty of perjury:

• Agreement is voluntary and not required
• Debtor can make required payments
• Agreement does not impose undue hardship on debtor or dependents
• Debtor understands right to rescind within 60 days after filing or before discharge, whichever is later (§ 524(c)(4))
• Debtor understands default allows repossession AND deficiency pursuit

Part D: Attorney Certification

Required when debtor is represented. Attorney certifies:

• Agreement fully explained to debtor
• Debtor entered agreement voluntarily with informed consent
• Debtor advised of legal effect, consequences, and default consequences
• Attorney believes debtor can afford payments
• Agreement does not impose undue hardship

Part E: Court Approval

Required when:

• Debtor is not represented by counsel, OR
• Schedule I/J shows income minus expenses insufficient to cover reaffirmed payments

Include notice of scheduled hearing; court must find (1) no undue hardship and (2) agreement is in debtor's best interest.

Signature Block

Include signature lines for:

• Debtor — signature, printed name, date
• Creditor — signature, printed name, title, date
• Debtor's attorney (if applicable) — signature, printed name, bar number, date
• Notarization block — include if required by local rules

Pitfalls and Checks

• Rescission rights are mandatory — omission renders the agreement unenforceable under § 524(c)(4)
• No coercion language — agreement must affirmatively state the debtor is not required to reaffirm
• Default consequences — prominently warn: creditor may repossess collateral AND pursue deficiency balance
• Collateral-to-debt ratio — if debt substantially exceeds collateral value, flag for additional disclosure; vulnerable to judicial scrutiny under undue hardship standard
• U.S. Trustee review — draft anticipating objection; economic justification must be apparent on the face of the document
• Local rules — verify whether the bankruptcy court requires notarization or additional local forms
• Plain language — maintain legal precision while ensuring the debtor can actually understand the obligation