To reaffirm a debt in bankruptcy you must ask your creditor to send you reaffirmation paperwork, consisting of a Reaffirmation Cover Sheet, a Reaffirmation Agreement, and a Motion For Approval of Reaffirmation Agreement. The creditor should fill in most or its entire portion of these papers before sending you the documents. Here are Andy Miofsky’s Five Easy Steps for you to complete the debtor portion:#1 After you receive your reaffirmation agreement, the first and most important step is to read it from start to finish. Make sure the property is accurately described, whether it be real estate or personal property. Look at the account balance – that is the amount of debt you are agreeing to pay. Look at the interest rate, the monthly payment amount and the length of the payment agreement. If you do not agree with any of the above items, send the agreement back to the creditor for corrections before you sign it.
#2 If you are satisfied with the terms of the agreement, the next step before you sign is to make sure the lender holds a valid perfected lien in the property. You might assume there is a valid lien, but your assumption could be wrong. If the lender does not hold a perfected lien, the bankruptcy trustee could claim the property as an asset of the bankruptcy estate and sell it in order to pay some of your debts. The trustee has the power to avoid an unperfected lien, and if that occurs, you will not be able to exempt any portion of the property. In other words, you will lose any and all interest in the property unless you agree to buy it from your bankruptcy estate. I suggest you mail your trustee a simple written request “Does this creditor have a valid lien on my property?” Use the trustee mailing address listed on your Notice of Bankruptcy. Include your name and address on a self addressed postage paid envelope for a quicker response. If you are unable to determine that the creditor has a valid lien, you should stop this process and hire an attorney to assist you immediately.
#3 After you receive verification from the trustee that the lien is valid, and if you still want to reaffirm the debt, you need to fill out the Cover Sheet. You are required to submit properly completed reaffirmation documents to the Court. The Court will not accept incomplete or improper documentation. Further, the Court will not complete these papers for you or give you advice.
Complete the open items [7, 8, 9, 10, 11, 12 and “Other Information”] on the Cover Sheet.
7A – Total monthly income. List the amount you previously placed on Schedule I, Line 16 of your Petition and Schedules when you filed bankruptcy.
8A – Total monthly expenses. List the amount you previously placed on Schedule J, Line 18 of your Petition and Schedules when you filed bankruptcy.
9A – Total monthly payments on reaffirmed debts. This number is not listed anywhere else. You have to add the monthly amount of any debts you intend to reaffirm and insert that total here.
7B – Monthly income. This number is not listed anywhere else. You need to add the amount of all your current monthly income and insert that total here. Do not include taxes or expenses deducted from your payroll. If your income changed since you filed your case this number will be different than the number you used at 7A.
8B – Monthly expenses. This number is not listed anywhere else. You need to add all your current monthly expenses and insert the total here. Do not include expenses that are payroll deducted or deducted from your income check. If your expenses changed since you filed your case this number will be different than the number you used at 8A.
9B – Monthly expenses for reaffirmed debts. This number is not listed anywhere else. You need to add any and all reaffirmed debts that you did not include in 8B and insert that total here.
10B – Net monthly income. Do the math. 7B minus 8B minus 9B = 10B.
11 – If 7A and 7B differ, explain why. Write your answer in your own words. Remember the A column contains numbers you used when you filed bankruptcy. The B column numbers should reflect your present situation, and may be the same or different than those numbers that you used when you filed your case.
12 – If 8A and 8B differ, explain why. Write your answer in your own words. Remember the A column contains numbers you used when you filed bankruptcy. The B column numbers should reflect your present situation, and may be the same or different than those numbers that you used when you filed your case.
If you completed either line 11 or line 12 you must sign the “Signature of Debtor” line. If only one debtor is reaffirming the debt, only that debtor should sign. A joint debtor must sign the “Joint Debtor” line if both spouses are reaffirming the debt.
“Other Information” – If line 10B is a negative number you must place a check mark in the  box and explain where you are going to get the money to pay this reaffirmed debt.
“Was debtor represented by counsel…” – answer the question truthfully and check the appropriate line.
“If debtor was represented by counsel…” – answer the question truthfully and check the appropriate line.
“Filer’s Certificate” – Sign the “Signature” line and print your name and the word “debtor” on the bottom line.
At this point you should be finished with the Cover Sheet.
#4 Next, go to the Reaffirmation Agreement, sometimes called the Reaffirmation Documents. The creditor will usually fill in most or its entire portion of these papers before sending you the documents. As to your portion:
First, you have to check one of the boxes in the upper right hand corner to indicate whether a “Presumption of Undue Hardship” exists. You will learn the correct box to check after you complete Part II “Debtor’s Statement In Support of Reaffirmation Agreement” at Letter C, Number 1[a-d]. So, take a look at Part II.
To complete Part II, first read question A and check the box that indicates whether you were represented by an attorney during the negotiation of this reaffirmation agreement. Answer the question truthfully and check the appropriate line. Next, read question B and check the box that indicates whether the creditor is a credit union. If you do not know the answer to this question, look at the first page of the Reaffirmation Agreement. If the creditor is a credit union, the creditor should have checked the Credit Union box that appears before Part I.
If your answer to either question A or question B is “No” then you must fill out Letter C, Number 1 and Number 2.
1a – Monthly income from all sources after payroll deductions. Insert the same number as the income listed on 7B.
1b – Monthly expenses including all reaffirmed debts except this one. Do the math, add 8B and 9B = 1b.
1c – Amount available to pay this reaffirmed debt. Do the math, subtract 1a minus 1b = 1c.
1d – Amount of monthly payment required for this reaffirmed debt. Insert the number listed at Part I Letter D.
If the number you inserted on line 1d is larger than the number you inserted on line 1c, then you must check “Presumption of Undue Hardship” in the upper right hand box on the first page of the Reaffirmation Agreement, also known as the Reaffirmation Documents. If the number you inserted on line 1d is smaller than the number you inserted on line 1c, or if you do not have to complete Number1, then you must check “No Presumption of Undue Hardship”.
As to Number 2, read both statements, then check the box you believe is more accurate. Note, the second statement requires you to explain, in your own words, why you believe you can pay this reaffirmed debt if your monthly income is less than your monthly expenses.
Next, if your answers to BOTH questions Part II A and Part II B were “Yes” read and check the box that reads “You believe this Reaffirmation Agreement is in your financial interest and you can afford to make the payments on the reaffirmed debt”. Also, check the first page box that says “No Presumption of Undue Hardship”.
Next, go to Part III Certification By Debtors and Signatures of Parties. Read Lines 1, 2, 3, 4, and 5. If you agree with each statement, date and sign the Debtor signature line. If only one debtor is reaffirming the debt, only that debtor should sign. A joint debtor must sign the “Joint Debtor” line if both spouses are reaffirming the debt.
At this point you should be finished filling out the Reaffirmation Agreement.
Next, check the appropriate boxes and sign the Motion For Approval.
#5 Mail the signed original Cover Sheet and Reaffirmation Agreement and Motion For Approval of Reaffirmation Agreement directly to the creditor.
You will have to attend a hearing with the Judge for approval of this agreement. Once an agreement is approved by the Court, the debt owed to the creditor will survive your bankruptcy. The creditor might not send you a bill so it is important to make your payments on time. Start making payment immediately after you complete the reaffirmation agreement and mark the monthly due date on your calendar or billing system so you do not default on this debt.
Andy Miofsky, Esq.
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Last modified: May 26, 2012