DEFINITION of 'Reaffirmation'

An agreement made between a debtor and a creditor to repay some or all of a debt. Reaffirmations are made on a purely voluntary basis by the debtor. The bankruptcy code stipulates that the debtor's attorney must file a statement with the court affirming that he or she can repay the debt without incurring further personal financial harm.

BREAKING DOWN 'Reaffirmation'

Reaffirmations cannot legally require the debtor to repay the debt. Lenders have no real leverage from them, and can only rely on the good faith intent of the debtor to repay the debt. This type of arrangement is prohibited under Chapter 13 Wagearner plans.

  1. Lender

    Someone who makes funds available to another with the expectation ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Finance

    The science that describes the management, creation and study ...
  4. Loan

    The act of giving money, property or other material goods to ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
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    A debt ratio and profitability ratio used to determine how easily ...
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