Think Carefully Before Reaffirming Discharged Debt: It's A Risky Move Skip to main content

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Think Carefully Before Reaffirming Discharged Debt: It's A Risky Move


Are you thinking you should pay back -“ or "reaffirm- -- some of the debt that was discharged in your bankruptcy? Don't fall prey to pressure tactics from creditors; if the debt was discharged, you have no liability for it. You may also think that reaffirming your old debts will allow you to rebuild your credit. That's true, but only if you can really afford it. If you get behind on your payments, you may end up right back where you started before bankruptcy, or worse. When you reaffirm a debt, you renew your personal liability for the debt; if you fall behind on your payments, not only will your credit suffer, but you could be sued on the debt!

You may also believe you have to reaffirm a debt because you won't be able to get the same kind of credit again after the bankruptcy, such as a car loan. This is a myth creditors want you to believe. While the bankruptcy can stay on your credit report for up to 10 years, that does not mean you won't be able to get new credit for 10 years. Wiping out the bulk of your onerous debts through bankruptcy will allow you to quickly reestablish a good payment history and become more attractive to creditors -“ because now you can afford to pay them. Keep in mind that bankruptcy has given you a unique and powerful opportunity to start over, to get your life back on track, and to avoid ever ending up overly-burdened with debt again.

You shouldn't let feelings of guilt or shame about having filed bankruptcy drive you to reaffirm old debts either. You filed bankruptcy because you had to; you couldn't just keep going on drowning in debt. Try to see this as a responsible decision, which was necessary to regain control of your life. Don't feel like you owe something to your old creditors. Just think of all the interest money you paid them over the years, and you probably won't feel so bad.

Special caution should be exercised if you are asked to reaffirm a secured debt. If you are intending to keep secured property, such as a car, your creditor may require you to reaffirm the debt. Any request for reaffirmation of a secured debt should be filed with the bankruptcy court and evaluated by your bankruptcy attorney. In many instances, despite the creditors insistence, a secured debt does not need to be reaffirmed. By signing such a reaffirmation without the advisement of an attorney, you are unnecessarily putting yourself back on the hook for the full amount of the debt. That means that after bankruptcy, if you default, the lender can sue you for the full amount of the loan.

The point is, reaffirmation is risky move for most people. It could strip you of the primary benefit of bankruptcy: to put your troubled financial past behind you. So, if you're thinking about reaffirmation, talk with your bankruptcy attorney first.

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