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 Pennsylvania, as in other states, bankruptcy law allows individuals to discharge certain debts, but it also provides the option to reaffirm debts, particularly for secured loans like home mortgages or car loans. Reaffirmation is a voluntary process where the debtor agrees to continue paying a debt despite the bankruptcy, in order to retain the property securing the loan. To reaffirm a debt, the debtor must sign a reaffirmation agreement with the creditor, which outlines the terms of the continued debt obligation, and this agreement must be filed with the bankruptcy court. The debtor must be current on the loan payments and must have sufficient bankruptcy exemptions to cover the equity in the property. The court will review the reaffirmation 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 reaffirmed debt even after the bankruptcy is discharged. It's important for debtors considering reaffirmation to consult with an attorney to understand the implications and ensure that the decision to reaffirm a debt is a sound one.