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 North Carolina, as in other states, bankruptcy law allows individuals to discharge certain debts, but it also provides an option to keep secured assets like a home or car through a process called reaffirmation. Reaffirmation is a voluntary agreement between the debtor and the creditor to continue the payment of an existing debt despite the bankruptcy. To reaffirm a debt, the debtor must sign a reaffirmation agreement and file it with the bankruptcy court. The debtor must be current on the loan payments and must have enough exemptions under bankruptcy law to cover the equity in the property. The court will review the agreement to ensure it is in the debtor's best interest and does not impose an undue hardship. If approved, the debtor remains legally obligated to pay the debt, and the asset is not subject to the discharge order. It's important for debtors to consider the implications of reaffirming a debt, as it could affect their financial recovery post-bankruptcy. Consulting with an attorney is advisable to navigate the complexities of reaffirmation agreements and bankruptcy exemptions in North Carolina.