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 Vermont, as in other states, bankruptcy law permits individuals to discharge certain debts, but it also allows for the option of reaffirmation. Reaffirmation is a legal process in which a debtor chooses to keep paying a specific debt, such as a home mortgage or car loan, to retain the property securing the debt. To reaffirm a debt, the debtor and the creditor must agree on the terms of a new contract and submit it to the bankruptcy court for approval. The debtor must be current on the loan payments and must have sufficient bankruptcy exemptions to cover the equity in the property. This process ensures that the debtor can keep the property while continuing to pay off the reaffirmed debt under the agreed terms. It's important to note that reaffirmation is a voluntary process and is not required under bankruptcy law. Debtors considering reaffirmation should consult with an attorney to understand the implications and ensure that it is in their best financial interest.