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Reaffirming a debt during Chapter 7 bankruptcy

On Behalf of | Feb 20, 2020 | Bankruptcy, Chapter 7 Bankruptcy

Often, it is not living expenses such as housing and transportation that lead to overwhelming debt. People may be able to afford these, but an accident or illness may lead to medical expenses that are impossible to repay. According to a report from, health-related issues are a factor in 66.5% of all bankruptcies. 

Finding relief from extreme medical debt does not have to mean giving up assets such as a home or vehicle. In fact, many lenders are willing to agree to allow the debtor to reaffirm the loan and continue to make payments on it. Here is what the U.S. Courts have to say about reaffirming a debt. 

Time limit 

The debtor and/or creditor must file the reaffirmation agreement before the bankruptcy discharge. The filing must take place no more than 60 days after the 341 meeting of creditors unless the court provides an extension on that 60-day period. 


The debtor maintains the legal obligation to pay a reaffirmed debt. There is a time limit of several years after a bankruptcy discharge before someone can file again, so if he or she cannot keep up with the payments and defaults on the loan, the lender may repossess the property and sell it. Then, the lender can attempt to collect the difference between the sale and the balance of the loan, which could mean wage garnishment or a lawsuit. 


The terms of the reaffirmation agreement may not be the same as the original loan agreement. The interest rate could be higher or lower, or the interest rate may not remain fixed. It is important to review the new terms carefully before signing the new agreement.