Bankruptcy law generally allows you to break your contracts with creditors to help you get out of debt. But sometimes you may want to keep a home mortgage or car loan as you work to recover from your bankruptcy. Reaffirmation is a process in bankruptcy where you agree to remain responsible for the debt or loan so that you can keep the property (house or car) that is securing your repayment of the loan.

In reaffirmation, you and the creditor enter into a new contract—usually on the same terms—and submit it to the bankruptcy court for approval. You will have to be current on your payments of the loan, and you must be eligible for a bankruptcy exemption that will allow you to protect all of the equity in the property securing the loan you want to reaffirm.

In Indiana, as in other states, bankruptcy law allows individuals to discharge certain debts, but reaffirmation agreements provide an option to exclude specific debts, like a home mortgage or car loan, from the discharge. By entering into a reaffirmation agreement, a debtor agrees to continue paying the reaffirmed debt under the original contract terms, or sometimes renegotiated terms, and retains the property securing the debt. The agreement must be filed with the bankruptcy court and approved by the court to ensure that the debtor can afford the payments and that the agreement is in their best interest. The debtor must be current on the loan payments and have sufficient bankruptcy exemptions to cover the equity in the property. If the court approves the reaffirmation, the debtor remains legally obligated to pay the debt despite the bankruptcy filing. It's important to note that reaffirmation agreements are voluntary and not required by bankruptcy law. Debtors considering reaffirmation should consult with an attorney to understand the implications and ensure that their rights are protected throughout the process.