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 New Hampshire, 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 remains legally obligated to repay the debt despite the bankruptcy. To reaffirm a debt, the debtor must be current on payments and have sufficient bankruptcy exemptions to cover the equity in the property. The agreement must be voluntary and is subject to approval by the bankruptcy court, which will assess whether the reaffirmation is in the debtor's best interest and does not impose an undue hardship. If approved, the debtor retains the property and continues to make payments under the terms of the reaffirmed debt. It's important for debtors considering reaffirmation to consult with an attorney to understand the implications and ensure that the agreement is properly executed and filed with the court.