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 Mexico, as in other states, bankruptcy law allows individuals to discharge certain debts, but they may choose to keep some assets, such as a home or car, by entering into a reaffirmation agreement with creditors. Reaffirmation is a legal process where the debtor voluntarily agrees to repay a debt despite the bankruptcy discharge. This agreement must be made before the discharge of debts in the bankruptcy case. The debtor and creditor create a new contract, often with the same terms as the original agreement, and this contract must be filed with the bankruptcy court. The court must approve the reaffirmation agreement to ensure it is in the debtor's best interest and not an undue hardship. To reaffirm a debt, the debtor must be current on payments and have sufficient bankruptcy exemptions to cover the equity in the property. It's important to note that reaffirming a debt means it will not be discharged, and the debtor will remain legally obligated to pay it. Debtors in New Mexico considering reaffirmation should consult with an attorney to understand the implications and ensure that the process is handled correctly.