When you file a Chapter 7 bankruptcy, the trustee in your case will seize any assets you have that are non-exempt to repay your outstanding debts. If you have assets that you do not fully own, such as a vehicle, then you may have to return that asset to the lienholder. In this situation, if you wish to keep your vehicle, you may have the option of signing a reaffirmation agreement. 

According to the National Consumer Law Center, reaffirming a debt is making an agreement with the lender to continue your responsibility to pay the debt. It supersedes your bankruptcy because the bankruptcy process would wipe out your debt, but the lender could take the collateral, your vehicle, with which you secured the loan. So, to keep your vehicle, you agree to keep paying the loan balance, and the lender does not repossess your vehicle. 

Committing to reaffirmation 

Reaffirming a debt is a serious decision because it means that you must continue paying your loan payments. It also means that if you default in the future, the lender may take whatever collection methods necessary to collect on the debt, including suing you for breach of contract. 

Making your choice 

You do not have to reaffirm a debt. It is completely your choice. You should make sure that you understand the terms of the agreement and what it will mean moving forward before you sign it. In addition, you do have the option to back out of the agreement 60 days after you file it with the court or before your bankruptcy discharge. You must cancel it in writing.