Debt Reaffirmation
After a debt is discharged in a bankruptcy proceeding, you can still choose
to repay it. This is known as debt reaffirmation—and it can have some
good effect in your credit rating, much like getting a reinstatement on a
foreclosure or paying a charge-off (though a reaffirmation doesn’t have
quite as positive an effect as those other cures).
Reaffirmation agreements must be filed with the bankruptcy court. To be approved,
they:
- should be undertaken voluntarily;
- must be in your best interest; and
- must not unduly burden you or your family.
Some credit card issuers and retailers have begun approaching consumers after
their debts have been discharged by a bankruptcy, pressuring those consumers
to reaffirm their debts—in exchange for issuing the bankrupt people
new credit cards.
If you have declared bankruptcy, you do not have to reaffirm any of the
debts that were discharged. And, while reaffirming may improve your standing
with a particular creditor, it has only a minor effect on your credit. A
better strategy for improving your credit is to pay all of your non-discharged
and new debts in a timely manner.
While some credit card issuers will try to get consumers—often unwittingly—to
reaffirm a debt that was defaulted on when they apply for new credit cards,
these companies cannot force you to reaffirm a debt that was discharged via
a bankruptcy.
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