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 Michigan, as in other states, bankruptcy law allows individuals to discharge certain debts, but they may choose to keep some secured debts like a home mortgage or car loan through a process called reaffirmation. Reaffirmation is an agreement made during bankruptcy proceedings where the debtor voluntarily agrees to continue paying a debt to retain the property securing the debt, such as a house or car. The reaffirmation agreement must be entered into before the discharge of the debtor's bankruptcy case and requires the approval of the bankruptcy court. To reaffirm a debt, the debtor must be current on the payments and must have sufficient exemptions to cover the equity in the property. The terms of the reaffirmation agreement are typically the same as the original contract, but they can be renegotiated with the creditor. It's important for debtors to consider the implications of reaffirming a debt, as it will not be discharged in bankruptcy and they will remain legally obligated to pay it. Debtors in Michigan considering reaffirmation should consult with an attorney to understand their rights and the potential consequences.