The Last Minute or Late Reaffirmation

Michael Primus

A reaffirmation agreement is a contract reinstating a debt otherwise dischargeable in bankruptcy. Often debtors in chapter 7 sign reaffirmation agreements related to car loans. In fact, some auto lenders (for example: Ford Motor Credit, Ford Leasing Trust, Jaguar Credit) insist on a valid reaffirmation if the debtor intends to keep a car and continue making regular payments. Without a valid reaffirmation, these lenders will repossess a car even if the monthly payments are current. Recently a few borrowers have been denied mortgage modifications where the underlying loan was not reaffirmed in a bankruptcy.[1]

To be valid, a reaffirmation agreement must be signed by the debtor, creditor, and in many circumstances the debtor’s attorney or the judge. Additionally, a reaffirmation must be filed with the court before a bankruptcy discharge is granted. Generally, a chapter 7 discharge is granted about 90 days after the initial papers (called the bankruptcy petition) are filed with the court. In this article, I discuss four scenarios involving reaffirmation problems.

Agreement Signed But Not Filed Before Discharge

What happens if the agreement was signed by all parties but not filed prior to the bankruptcy discharge? Federal Rule of Bankruptcy Procedure 4008(a) provides “The court may, at any time and in its discretion, enlarge the time to file a reaffirmation agreement.” Counsel can move to reopen the case (See Bankruptcy Code section 350(b)) and file a motion asking for additional time. In my experience judges grant these requests.

Agreement Not Signed, Discharge Expected Soon

What happens if the reaffirmation is not signed and the discharge is expected tomorrow? Counsel can file a motion to enlarge the time to file a reaffirmation pursuant to Federal Rule of Bankruptcy Procedure Rule 4008(a) and rest assured the discharge will not be entered if the motion is pending. See Federal Rule of Bankruptcy Procedure 4004(c)(1)(J). The motion can be filed ex parte which streamlines the process. Usually, the parties only need a day or two to get the reaffirmation filed. That means counsel can request additional time to file the reaffirmation and actually file the reaffirmation before the court has a chance to rule on the motion. The motion will be moot once the reaffirmation is filed.

Agreement Contemplated But Not Signed, Discharge Entered

What happens if the reaffirmation was contemplated but not fully executed before entry of the discharge? Often, after discharge the debtor is told by a lender that he/she “needed to sign a reaffirmation” and the debtor is asked to contact counsel. Counsel then initiates contact with the lender regarding the situation. Bankruptcy code section 524(c) requires a reaffirmation be “made” before entry of the discharge. Federal Rule of Bankruptcy Procedure 4008(a) gives the court latitude to allow late filing of a reaffirmation. The distinction between when a reaffirmation is “made” and when it is filed is unresolved by the statute. Generally courts consider a reaffirmation made if it appears the parties reached an agreement prior to discharge.[2] Factors to consider: did the Statement of Intentions indicate the intent to reaffirm? Was a reaffirmation prepared prior to discharge? Did the creditor execute the reaffirmation prior to discharge? Did the debtor(s) execute the reaffirmation prior to discharge? Did the parties perform under the terms of the agreement? Are there other facts to indicate that a meeting of the minds was reached prior to signing of the formal agreement?

Agreement Not Contemplated, Discharge Entered

In this situation, nobody considered reaffirmation prior to the discharge being entered. This might occur if the debtor intended to surrender the collateral initially but due to a change in circumstances (i.e. found a job) is able to afford the payments. This is the most difficult scenario for the debtor(s) and counsel. Counsel should consider a motion to vacate the discharge so the agreement can be made and filed, and thereafter the clerk of court can reissue a discharge. The courts are split on whether the statutes and rules allow the court to vacate a discharge for this purpose.[3]
Counsel should also carefully review the flawed wording of Bankruptcy Code section 524(d) which appears to allow the court to approve a reaffirmation after discharge if the debtor was not represented by counsel in negotiation of the reaffirmation. Perhaps the debtor can act without counsel for the purpose of negotiating a reaffirmation? One snag – many courts, including the Bankruptcy Courts for the Northern District of California, have local rules or guidelines requiring debtor’s counsel to negotiate reaffirmation agreements as part of “bundled” chapter 7 representation. In the Northern District of California, the applicable guideline is entitled “Guideline for Legal Services to be Provided by Debtor’s Attorney In Chapter 7 cases” which is found on the court’s website at

Michael Primus has practiced bankruptcy law since 1992. He has offices in Walnut Creek, Antioch and Hercules. He can be reached at 925-934-0500 or 510-741-1800.

[1] Reaffirmation is not required for a HAMP modification. See For other types of mortgage modifications, the rules vary and a complete discussion is beyond the scope of this article.

[2] In Bankruptcy of Bellano, 456 B.R. 220, 228 (Bankr. E.D.PA 2011) the court collects cases where the parties reached an agreement to reaffirm prior to discharge but filed the formal agreement post-discharge.

[3] See In Re: Edwards, 236 B.R. 124, 126-7 (Bankr. D. N.H. 1999)(permissible to vacate) But See, Rigal v. Fleet Mortgage Corp. (In Re Rigal), 254 B.R. 145, 148 (Bankr. S.D. Tex 2000)(impermissible to vacate).

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