How to reaffirm a mortgage after bankruptcy

You don’t mention the kind of bankruptcy you are contemplating. If it is a Chapter 13 bankruptcy, the type in which your debts are adjusted and rescheduled, and you pay them off over a 3 – 5 year time period, you do not need to reaffirm the mortgage debt per se—though the bankruptcy plan you come up with during the process must provide for continuing to pay the mortgage.

It’s in a Chapter 7 bankruptcy, where assets are ordinarily liquidated to pay debts, you need to reaffirm secured debts, including mortgages. If you don’t reaffirm, the lender has the right to repossess or, in the case of a home, foreclose on the property.

Reaffirmation is fairly straightforward. It is an agreement that you will remain liable for the debt—i.e. that it will not be discharged in bankruptcy—and you will pay it. The reaffirmation does not need to be an agreement to pay all the remaining debt, though the lender would have to agree to accept partial payment. In exchange for your reaffirmation, the lender agrees to not foreclose or repossess—at least as long as you make payments per the agreement.

Once you strike an agreement with the lender, it must be filed with the court. There are various requirements for the reaffirmation, which can be found in the Bankruptcy Code at 11 U.S.C. Section 524. Chief among them, the payment plan under the reaffirmation must be reasonable and achievable for the debtor (you). If you are filing bankruptcy without the aid of an attorney, then the bankruptcy judge must approve the reaffirmation. If you have an attorney—which is always recommended, to make sure you are taking full advantage of your rights under bankruptcy law—then as long as the reaffirmation meets the requirements of the U.S. Code and is filed properly, it will be approved. Note that reaffirmation must be done before debts are discharged.