THE CHAPTER 7
Secured creditors may retain some rights to
seize property securing an underlying debt even after a discharge
is granted. Depending on individual circumstances, if a debtor
wishes to keep certain secured property (such as an automobile),
he or she may decide to “reaffirm” the debt. A reaffirmation
is an agreement between the debtor and the creditor that the
debtor will remain liable and will pay all or a portion of the
money owed, even though the debt would otherwise be discharged in
the bankruptcy. In return, the creditor promises that it will not
repossess or take back the automobile or other property so long as
the debtor continues to pay the debt.
If the debtor decides to reaffirm a debt, he
or she must do so before the discharge is entered. The debtor must
sign a written reaffirmation agreement and file it with the court.
11 U.S.C. § 524(c). The Bankruptcy Code requires that
reaffirmation agreements contain an extensive set of disclosures
described in 11 U.S.C. § 524(k). Among other things, the
disclosures must advise the debtor of the amount of the debt being
reaffirmed and how it is calculated and that reaffirmation means
that the debtor’s personal liability for that debt will not be
discharged in the bankruptcy.