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A debtor in a bankruptcy case may decide to remain legally obligated to pay a debt that would otherwise be discharged in bankruptcy. This is called reaffirming a debt. Reaffirming a debt is voluntary; debtors are not required to reaffirm any debt.
The Bankruptcy Code allows debtors to reaffirm debts, but an agreement to reaffirm a debt will be enforceable despite the bankruptcy discharge only if it complies with specific procedures. Director’s Form 2400A (Reaffirmation Documents) includes the Reaffirmation Agreement, disclosures, and other documents necessary for a debtor to reaffirm a debt.
This form cannot be used with a separate, attached Reaffirmation Agreement because some of the required disclosures are contained in the Reaffirmation Agreement portion of the form, rather than in the Disclosure Statement portion of the form. Because 11 U.S.C. § 524(k)(3)(J)(i) contemplates that a separate Reaffirmation Agreement may be used as long as the proper disclosures have been made, parties should draft their own documents, use Director’s Form 2400A/B ALT, or use other forms authorized by local courts if they want to use a separate attached Reaffirmation Agreement.
The reaffirmation of debt is governed by 11 U.S.C. § 524(c), (d), and (k). A Reaffirmation Agreement is enforceable only if it complies with these Bankruptcy Code provisions. 11 U.S.C. § 524(c).
In addition, 11 U.S.C. § 524(k) sets out extensive specific and detailed descriptions of the disclosures that a debtor must receive before or at the time the debtor signs the Reaffirmation Agreement. 11 U.S.C. § 524(c)(2). The required disclosures consist of the Reaffirmation Agreement, the Disclosure Statement, and other documents described in 11 U.S.C. § 524(k).
The January 2007 version of Director’s Form B240A (now designated as B2400A/B ALT) which implemented the reaffirmation disclosures and form requirements of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, carefully tracked the statutory language and organization. As a result, the form was quite long and some of the most significant information needed for court review followed many pages of preliminary disclosures and information.
Based on the authority provided by 11 U.S.C. § 524(k)(2), this revised form organizes the required information in a different order, bringing information important to the court to the beginning of the document while directing the debtor’s attention to pertinent disclosures and definitions that must be reviewed before entering into the Reaffirmation Agreement. It also streamlines the documents and uses language that is easier to understand. To avoid redundancy, some of the required disclosures are included in the Reaffirmation Agreement and are simply referred to in the Disclosure Statement.
The Amount Reaffirmed in Part I.B., includes a blank in which to insert the date of the disclosures to provide a definite, identifiable termination point for the accrual of fees and costs. 11 U.S.C. § 524(k)(3)(E) provides for the disclosure of the “Annual Percentage Rate” that applies to the reaffirmed debt, and the statutory provision includes great detail about how to Form 2400A Page 3 compute that rate. The form contains a space to fill in the Annual Percentage Rate (which the creditor must calculate according to the detailed statutory instructions) and requires disclosure as to whether the rate is fixed or variable. Annual Percentage Rate is defined in Part V.C. of the form as the “interest rate on a loan expressed under the rules required by federal law.” The revised form omits the statutory detail about how the rate is determined.
This Director’s form is optional. Do not use it with a separate, attached Reaffirmation Agreement.
This form does not replace the Reaffirmation Cover Sheet required by Fed. R. Bankr. P. 4008(a), even though some of the required information is the same.
Fill in the blanks at the top of the form, entering the district in which the bankruptcy case is filed, the debtor or co-debtors’ names, case number, and chapter number. Fill in the name of the creditor, and check the box if the creditor is a credit union. If the creditor is not a credit union, leave the box blank.
All blanks should be filled in and all appropriate boxes checked. If two boxes appear in an answer, check one.
Part I: Reaffirmation Agreement
A. Describe the original agreement being reaffirmed.
B. Fill in the total amount of the debt being reaffirmed. Fill in the date the disclosure was prepared.
C. Fill in the Annual Percentage Rate, as determined under the appropriate method set out in 11
U.S.C. § 524(k)(3)(E). If more than one interest rate applies to the reaffirmed debt, the creditor may write in more than one rate. Check the appropriate type of rate for the loan.
D. Indicate the repayment terms. The creditor may include additional lines if multiple balances are to be paid at different rates or if the form categories do not adequately cover the terms of this Reaffirmation Agreement. The court needs this information to review the Reaffirmation Agreement.
Part II: Your Statement in Support of Reaffirmation Agreement
A and B. If an attorney did not represent the debtor or if the creditor is not a credit union, fill out C.1. and C.2.
C.1.a-d. Fill in information about present income and expenses. Do not use income and expense information from the bankruptcy schedules unless it is identical to the present income and expenses. Calculate the amount available to pay the reaffirmed debt. Then check the appropriate box at the top of page 1.
C.2. Check whether the payments on the reaffirmed debt will impose an undue hardship on debtor or debtor’s dependents. If the monthly income is less than the monthly expenses, the debtor must explain why reaffirming the debt will not cause an undue hardship. The debtor should identify any additional sources of funds to make the payments.
D. If the debtor is represented by an attorney and the creditor is a credit union, indicate whether the debtor believes that the reaffirmation agreement is in the debtor’s financial interest and the debtor can afford to make the payments. Then check the box on page 1 that says, “No Presumption of Undue Hardship.”
Part III: Certification by Debtors and Signatures of Parties
Any debtor (including any joint debtor) who agrees to reaffirm a debt must sign and date the certification. Fill in the creditor’s name and address, along with the printed name of the creditor’s representative who negotiated the Reaffirmation Agreement. The representative must sign and date the Reaffirmation Agreement.
Part IV: Certification by Debtor’s Attorney (if any)
Fill out this certification if the debtor was represented by an attorney in negotiating the Reaffirmation Agreement. See 11 U.S.C. § 524(c)(3) and (k)(5).
Part V: Disclosure Statement and Instructions to Debtors
This part of the Reaffirmation Documents contains definitions, the additional required disclosures that are not included in the Reaffirmation Agreement itself, and instructions to the debtor.