Even if a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car. To promise to pay that debt, you must sign and file a reaffirmation agreement with the bankruptcy court. Reaffirmation agreements are under special rules and are voluntary. They are not required by bankruptcy law or by any other law. Reaffirmation agreements–

* must be voluntary;
* must not place too heavy a burden on you or your family;
* must be in your best interest; and
* can be canceled anytime before the court issues your discharge or within 60 days after the agreement is filed with the court, whichever gives you the most time.

If you are an individual and you are not represented by an attorney, the court must hold a hearing to decide whether to approve the reaffirmation agreement. The agreement will not be legally binding until the court approves it.

If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. The creditor can also take legal action to recover a judgment against you.

Chapter seven bankruptcy is the most common type of bankruptcy filed each year by debtors, with Chapter 13 following close behind. Chapter 7 bankruptcy is for individual debtors only (you can file with a spouse), it is not for businesses. Businesses typically file Chapter 11 bankruptcy. In order to file ch 7, the debtor must have little income left after paying typical monthly expenses each month such as rent or mortgage, utilities and groceries. Most consumers that file have a lot of unsecured debts like credit cards or medical bills that are not tied to property.

When filing chapter 7 bankruptcy the court does look at your specific expenses and compares them to averages in your area. While that means you don’t have to be at poverty level, it does mean that you cannot be using extra income for extravagant living while saying you can’t pay your bills. For example, if the average for groceries in your area is $400 a month for your family, the trustee will likely not accept your $2000 grocery bill unless you have extenuating circumstances that make the amount necessary for survival, such as a medical condition that requires special food. The new Means Test, added by the new bankruptcy laws, is what helps the Trustee determine if you have enough income for a Chapter 13.

Most unsecured debts are completely dischargeable, meaning they will be wiped away once the bankruptcy petition is filed and approved/discharged. There are some debts that are not dischargeable except under specific circumstances, like student loans, taxes, child support and a few others called “priority claims.”

If your trustee determines after looking at your income and monthly expenses that you do in fact have extra income, they may push you into a Chapter 13 bankruptcy and create a repayment plan for your debts.

When filing a chapter 7 bankruptcy petition you will select bankruptcy exemptions that will protect your property that you want to keep. Each state can determine the property that can be protected and what amount you can keep. Any amount of value that is over the exemption is subject to being used to pay your debts.