Statement of Intention

• A Chapter 7 debtor must file a legal document called a “Chapter 7 Individual Debtor's Statement of Intention” with the bankruptcy court. The document tells the court and your secured creditors which, if any, collateral you want to surrender, redeem or reaffirm in your case. Choosing to reaffirm means keeping the property and waiving the right to discharge the debt securing it. For example, a debtor wishing to maintain her only form of transportation may choose to reaffirm her vehicle's loan.
  
  

Reaffirmation

• Your secured creditor will provide you with a reaffirmation agreement if you indicate you wish to reaffirm the debt. The agreement discloses your loan terms and requires you to disclose your budget. If you would have to spend more money than you make to keep paying the debt, a presumption of undue hardship will arise, at which point you must explain how you intend to make your payments. Your reaffirmation agreement includes a place for your attorney to sign; however, she may choose to decline if she believes reaffirming the loan is not in your best interest.
  
  

Court

• If your attorney does not sign your reaffirmation agreement, you may have to go to court to have the bankruptcy judge approve it. Once you’re in court, the judge will ask for proof that you can pay the reaffirmed debt without finding yourself back in bankruptcy court. Affidavits or testimony from people making a financial contribution to your household may be beneficial.
  
  

Rescind

• If the court approves the reaffirmation agreement your attorney refused to sign, you must file it with the court for it to be effective. After filing your reaffirmation agreement, you have the right to withdraw or rescind it. Bankruptcy law allows you one of two time periods to rescind. You may rescind anytime before the court grants your discharge, or up to 60 days after you file your reaffirmation agreement, whichever comes later. You must, however, notify your lender that you rescinded.