A path exists for people who file Chapter 7 bankruptcy to keep property subject to seizure by creditors. Sometimes, people may use assets, such as homes or vehicles, as collateral for debts. Lenders may place liens on such property, allowing them to repossess or otherwise seize the asset in the event people fall behind on their payments. According to the U.S. Courts, a reaffirmation agreement may allow people to retain the property their creditors have a right to seize, even after a bankruptcy discharge. 

Before the court enters a bankruptcy discharge, people may choose to reaffirm debts. Taking this action may allow them to keep certain secured properties, like a vehicle they have yet to pay off, for example. Through a reaffirmation, people reach may reach agreements with secured creditors, promising to pay a portion or all of what they owe. In exchange, the secured creditors agree not to take back the collateral property for as long as people stay current on their agreed-upon payments. 

According to the U.S. Department of Justice, reaffirmation agreements for secured debts must meet certain requirements to gain court approval. The agreement to reaffirm a debt cannot place too heavy a burden on people or their families, and it must be voluntary and be in a debtor’s best interests. Within 60 days of filing the reaffirmation agreement or before the debt discharge occurs, whichever provides the most time, people may rethink their choice and cancel the reaffirmation. 

Once approved, people must comply with the terms of their reaffirmation agreements. Should they fail to make the agreed-upon payments, people may owe the debts as they did prior to their bankruptcy filings. The creditor may then pursue action to recover any property used as collateral or to recover a judgment against the debtor.