Reaffirmation Problems and Alternatives


The debtor is entitled to rescind (erase) a REAFFIRMATION agreement during the following time period: (a) at any time prior to discharge; or (b) within sixty days after making the agreement, whichever time period is longer.


We’d like to walk you through a fairly common REAFFIRMATION scenario to show you how conflicts between the lawyer and client come about. We hope this will give potential debtors some perspective about the process. Imagine that the client is demanding that his or her lawyer sign the client’s proposed motor vehicle REAFFIRMATION agreement, and the lawyer does not want to do so. What are the lawyer and client thinking and why?

Reaffirmation from the lawyer's perspective

The lawyer may know that the client has previously had difficulty staying current on payments for the vehicle. The lawyer may also know from reviewing financial records that the client is prone to recurring financial hardships and irregular income.

The lawyer may be convinced that the client is going to default at some future date, losing the vehicle anyway. If the vehicle is repossessed, the client will also suffer a significant deficiency liability that could have been discharged in the bankruptcy.

The lawyer does not want to take any professional risk for letting the client sign a reaffirmation that may be prone to failure. The reaffirmation agreement requires the lawyer to sign a declaration under penalty of perjury that the agreement will not create an undue hardship. How can the lawyer really say that under oath?

The car is worth a lot less money than the amount of the debt and is really a bad deal all things considered.

The reaffirmation requirements impose duties on the lawyer that go far beyond what most lawyers feel is the appropriate role for an advocate. Most lawyers will resist this different role. They feel that the requirements force them to become what in effect is a character witness for their client because they must declare that the deal creates “no undue hardship” on their client!

Reaffirmation from the client's perspective

The client is worried sick over the thought of losing his or her car and doesn’t think there are any viable alternatives.

The client becomes frustrated by the lawyer’s reluctance or actual refusal to sign the proposed agreement. If the lawyer does not sign the REAFFIRMATION agreement, it won’t be effective unless the court holds a hearing and approves it.

A court reaffirmation hearing means the client may have to take a day off from work, face the anxiety of having to go to court, pay for parking at court, possibly pay their lawyer to go with them and advocate for an agreement that the lawyer actually disfavors, and still possibly face denial of the agreement by a judge who will be looking for an excuse to withhold approval.

All of this unpleasantness would be avoided if the lawyer would just sign the agreement. The client feels that there is no risk that he or she would ever default (again).

The client believes that he or she has no choice and must reaffirm because he or she won’t be able to get another car if this one is lost.


Assume the debtor is faced with having to reaffirm a $10,000 loan balance for a vehicle worth only $5000, or else give up the wheels. In some cases there may be ways you can get around the Debtor’s perceived need to accept a bad bargain that clearly is not in the debtor’s best interests.

First ask, “Would you really like to buy this exact same vehicle all over again, in the present condition ‘as is’ for the same amount of money that you will already owe under this agreement? (Under this perspective, most clients will say “No way” and at least open their minds up to the possibility of other alternatives).

Here are some strategies that you might consider. We are not judging the morality of these tactics. These are offered simply as emergency stop gaps to solve a temporary transportation issue so that the debtor does not get trapped in a bad reaffirmation.

IDEA 1--Stop making car payments and buy something cheap for cash

As soon as the case is filed, the debtor ordinarily has a “free ride” under the automatic stay. This will ordinarily protect the vehicle from repossession for about two and one-half months (that is, until 45 days after the first meeting of creditors).

The debtor should use that time to save up money towards buying a cheap “transportation car” until the debtor is able to get into something else (see below). Very cheap cars really are available. With careful shopping, they can be had from private parties and from organizations. For example, both the Salvation Army and Goodwill sell cheap running cars that have been donated. They have several locations. (Note: A debtor that can’t save enough money to buy themselves a “runner” vehicle will likely never have been able to make the payments on a reaffirmation.)

IDEA 2--Buy a car with financing after bankruptcy

Upon discharge, most debtors are aggressively solicited by new car dealers, offering “easy terms” to finance or lease a new car. They specifically target people emerging from bankruptcy as sales leads. The debtor can usually get into a new car, even with bad credit, provided they have a sufficient and steady income. This may be a far better alternative than making a bad reaffirmation.

The new car loan won’t start out with more money owing than the vehicle is worth, it likely will represent a better investment than keeping the debtor’s old car with upside down financing on it. It’s also likely that the new car will probably be more reliable transportation with a new car warranty.

Of course, the catch is that the debtor needs to play for time to get their discharge. Here is how to do that: Reaffirm if necessary to keep temporary possession of the vehicle until the debtor receives a discharge, but rescind the reaffirmation within 60 days after discharge (or within the applicable time limit—see above). Use that time to get into another vehicle, and be sure to rescind the reaffirmation before it becomes binding.

IDEA 3--Get help from a friend

Maybe a friend, lover or family member will buy or lease something for the debtor to drive? The debtor can be insured and registered as a driver of the vehicle, and the debtor can be the one who makes the payments.

IDEA 4--Rent or borrow while waiting for your discharge

There are companies that will rent used cars on a monthly basis. The payment for these monthly rentals is usually much less than the payments on the debtor’s car loan. After the debtor receives a discharge the debtor can probably purchase and finance a new car.

IDEA 5--Use public transportation while waiting for your discharge

Maybe there is public transportation that the debtor can use on a temporary basis, until discharge, and then buy a new or replacement car?

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