Interesting case on Reaffirmation Agreements in Texas

Hat tip to Stephen Sather, this is an interesting case where the Texas bankruptcy court denied a reaffirmation agreement due to the hardship it placed on the debtor. The judge goes through the process of when a court will deny a reaffirmation agreement (even if debtor and creditor agree), and has some advice for Chapter 7 attorneys in practice on how to deal with debtor clients.

If you're not familiar with reaffirmation agreements in bankruptcy, basically a reaffirmation agreement under Section 524(c) is a new contract between a debtor in bankruptcy and a creditor (typically a secured creditor) wherein the debtor "reaffirms" the debt owed to the creditor in order to not have to surrender the property to the creditor with that lien interest/security interest. Typically there is an agreement on the fair market value of the property to be paid back with an agreed interest rate, and it is enforceable as a post bankruptcy debt that will not be discharged in the bankruptcy. This is usually done with vehicles used by the debtor, but it also is used to keep household property like washers and dryers, etc.

Copy of the case is here.