Should You Reaffirm Your Debt in Bankruptcy?
You are not alone. Every day, people just like you — good people going through a hard time — call our office. We do not judge. We listen, we explain your options clearly, and we only recommend what is genuinely in your best interest. Call 718-273-2525 for a free, confidential consultation →
A reaffirmation agreement is one of the most important — and misunderstood — decisions in a New York or New Jersey reaffirmation bankruptcy case. Made incorrectly, it can undo the very protection that bankruptcy provides. The Law Office of Jay Meyers helps clients in Staten Island, Brooklyn, Queens, Manhattan, the Bronx, and throughout New Jersey make this decision with full understanding of the consequences.
Critical Warning: When you sign a reaffirmation agreement, you agree that this specific debt will not be discharged in your bankruptcy. If you later default on the reaffirmed debt, the creditor can sue you personally, garnish your wages, and pursue your other assets — just as if you had never filed bankruptcy.
What Is a Reaffirmation Agreement?
When you file Chapter 7 bankruptcy, most of your debts are permanently discharged — meaning you are no longer personally liable. However, secured debts like car loans and mortgages are different. The lender holds collateral (the car or house), and to keep that collateral, you generally have three options:
⚠ Time Matters
The longer you wait, the fewer options you have. A bankruptcy filing stops all collection activity immediately — the same day you file. Creditors cannot call, sue, garnish your wages, or foreclose while the automatic stay is in effect. Call now →
- Reaffirm: Sign a new agreement to remain personally liable on the original terms
- Redeem: Pay the lender the current market value of the collateral in one lump sum
- Surrender: Return the collateral to the lender and owe nothing further
- Ride-through: In some cases, continue making payments without reaffirming
When Reaffirmation Makes Sense
Reaffirmation can be beneficial when:
“Jay gave me reassurance and hope. He helped me understand that there is a life past all of this — and he delivered. I will forever be grateful.”
Ray Levato — Bankruptcy Client • Read All Reviews →
- You have a car loan with favorable terms and need the vehicle for work
- Your income reliably covers the payment after all living expenses
- The lender will not accept ride-through and will repossess without reaffirmation
- You want the payments to be reported positively to credit bureaus to rebuild your score
- The debt balance is close to or below the value of the collateral
When Reaffirmation Is a Mistake
We advise against reaffirmation when:
- Your income is unstable or insufficient to reliably cover the payment
- The collateral is worth significantly less than what you owe
- You are reaffirming a mortgage — in most cases, New York and New Jersey law allows you to keep your home simply by continuing payments
- You were a co-signer rather than the primary borrower
- You have other large expenses that may strain your budget
The Reaffirmation Process in New York
Step 1: Negotiation with the Creditor
Your attorney contacts the creditor to discuss the reaffirmation terms. Sometimes we can negotiate better terms — lower interest rate, reduced balance — as part of the reaffirmation.
Step 2: Court Filing
The signed reaffirmation agreement must be filed with the bankruptcy court before your discharge is entered. The deadline is typically 60 days after your 341 meeting of creditors.
Step 3: Court Review & Hearing
If you are represented by an attorney, the court usually approves the agreement without a hearing — unless the agreement appears to be an undue hardship on your budget. If no attorney is involved, a hearing before the bankruptcy judge is required.
What Happens If You Cannot Reaffirm?
If you cannot qualify to reaffirm a debt — typically because your budget does not support it — you have options:
- Ride-through: Some lenders allow you to continue making payments informally. Your personal liability is discharged, but you keep the collateral as long as payments continue.
- Redemption: Pay the creditor the current fair market value of the collateral in a lump sum, even if you owe more. This can be financed through specialized lenders.
- Surrender: Return the collateral. You owe nothing further and your credit report shows the debt as "included in bankruptcy."
We work through each option with you based on your specific lender, loan balance, vehicle value, and budget to find the best outcome.
Ready to Take the First Step?
One phone call can change everything. We will tell you exactly where you stand — no jargon, no pressure, no obligation. Most clients feel better after the very first conversation.
Confidential • No obligation • Habla Español • We come to you if needed
Related Legal Topics
- Chapter 7 & Chapter 13 Bankruptcy — Full overview of bankruptcy options in New York.
- Mortgage Modification & Foreclosure Defense — If reaffirmation is not right, modification may be.
- Reaffirmation in New Jersey — Considering reaffirmation in a NJ bankruptcy case?
Reaffirmation Agreement FAQ
What is a reaffirmation agreement in bankruptcy?
A reaffirmation agreement is a contract where you agree to remain personally liable on a specific debt — typically a car loan or mortgage — despite filing bankruptcy. In exchange, you keep the collateral and the creditor continues reporting your payments to credit bureaus.
Should I reaffirm my mortgage in Chapter 7?
In most cases, no. New York and New Jersey law allows you to keep your home by simply continuing to make payments — without reaffirming. Reaffirming means the debt survives your bankruptcy discharge, exposing you to personal liability if you later default.
What happens if I don't reaffirm my car loan?
If you do not reaffirm your car loan, you may still be able to keep your car by continuing payments (called 'ride-through'), but the lender is not obligated to report your payments to credit bureaus. Some lenders will repossess the vehicle post-discharge if you do not reaffirm — we will advise you based on your specific lender.
Can the court reject a reaffirmation agreement?
Yes. The bankruptcy court reviews reaffirmation agreements and can reject them if the judge determines the agreement is an undue hardship — meaning your income does not cover the payments plus living expenses. We help you evaluate whether reaffirmation is in your best interest before signing anything.
What is the deadline to file a reaffirmation agreement?
A reaffirmation agreement must be filed with the court before your Chapter 7 discharge is entered — typically within 60 days of your 341 meeting. Missing this deadline means the debt is discharged regardless of your intentions.