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The short answer is that YES, they can. The Reaffirmation Agreement
contains terms agreed to by the debtor and creditor; if the creditor
insists upon certain terms as a condition to entering into the
Agreement, then the acceptance of that/those terms is necessary by the
Since you were not represented by an attorney, any reaffirmation
agreement must be approved by the court. You have an option of
rescinding such agreements within 60 days of filing of the agreement
with the Court.
But, please consider that you may have some negotiating leverage here,
depending on the type of collateral, the amount outstanding, the
ability of the lender to sell the collateral and make itself close to
An attorney may be very useful here. First, an attorney may be very
able to negotiate a better deal than you can by virtue of being an
independent third party. Second, there are some complex legal points
surrounding reaffirmation agreements that are subject to the unique
rules used by your bankruptcy court.
The law on this topic is found at 11 USC 524(c):
In summary, an agreement between the lender and the borrower is
enforceable only if:
1. the agreement is made prior to discharge;
2. the agreement contains a clear and conspicuous statement which
advises the debtor that the agreement may be rescinded at any time
prior to discharge or within sixty days after such agreement is filed
with the court, whichever occurs later, by giving notice of rescission
to the holder of such claim; and
3. the agreement contains a clear and conspicuous statement which
advises the debtor that such agreement is not required under this
title, under nonbankruptcy law, or under any agreement not in
accordance with the provisions of this subsection;
4. The agreement is voluntary.
5. Not a hardship on the debtor.
Because most debt is discharged in bankruptcy, mortgage companies and
car, furniture and appliance financers typically want the debtor to
sign a document known as a Reaffirmation Agreement. Signing this
agreement results in the debtor waiving his Chapter 7 discharge and
agreeing to continue to make payments as called for by the original
loan documents. This allows the debtor to keep his home, car or
furniture. The decision whether or not to reaffirm a debt is a serious
one and needs to be discussed with your attorney so that all options
are understood. If the debtor stops paying on the asset after a
Reaffirmation Agreement is signed, then the asset can be foreclosed or
repossessed and a deficiency judgment obtained for the difference. If
a debtor changes his mind and wishes to terminate or rescind a
Reaffirmation Agreement, then the debtor has 60 days to file a
recission agreement after a Chapter 7 reaffirmation is fully executed
and filed with the Bankruptcy Clerk's office. You should consult an
attorney before making any decisions regarding reaffirmation.
A debtor may repay as many dischargeable debts as desired after filing
under chapter 7. By repaying one creditor, a debtor does not become
legally obligated to repay any other creditor. The only dischargeable
debt that a debtor is legally obligated to repay is one for which the
debtor and the creditor have signed what is called a "reaffirmation
agreement." If the debtor was not represented by an attorney in
negotiating the reaffirmation agreement with the creditor, the
reaffirmation agreement must be approved by the court to be valid. If
the debtor was represented by an attorney in negotiating the
reaffirmation agreement, the attorney must file the agreement and the
attorneys statement with the court in order for the agreement to be
valid. If a dischargeable debt is not covered by a reaffirmation
agreement, a debtor is not legally obligated to repay the debt, even
if the debtor has made a payment on the debt since filing under
chapter 7, has agreed in writing to repay the debt, or has waived the
discharge of the debt.
There is a seriously complex debate between the United States Circuit
Court of Appeals on a related issue: In some areas, a debtor can
retain the collateral without reaffirmation as long as the required
payments are continued. In other areas of the country, a creditor may
seize collateral absent a reaffirmation agreement. See, for example,
PERTUSO v. FORD MOTOR CREDIT COMPANY, 233 F.3d 417 (6th Cir., 2000).
Best of luck with this. If you have any further questions, please hit
the REQUREST FOR CLARIFICATION.