Mortgage Reaffirmation in Bankruptcy 2026: How to Keep Your Home
You're filing Chapter 7 bankruptcy, but you want to keep your home. Here's the good news: 73% of Chapter 7 filers successfully keep their homes through mortgage reaffirmation (American Bankruptcy Institute, 2025).
But here's what most people don't know: Reaffirmation is optional. You can sometimes keep your home WITHOUT reaffirming-and in some cases, that's the smarter move. Plus, reaffirmation gives you leverage to negotiate better mortgage terms (lower rate, reduced principal, waived fees).
This guide breaks down exactly how mortgage reaffirmation works, when to do it (and when NOT to), and how to use it as a negotiating tool. Plus, we'll show you post-bankruptcy mortgage options if you decide not to reaffirm.
What Is Mortgage Reaffirmation? (And Why It Matters)
When you file Chapter 7 bankruptcy, all your debts are discharged (eliminated)-including your mortgage. But if your mortgage is discharged, the lender can technically foreclose even if you're current on payments.
Reaffirmation is a legal agreement where you voluntarily agree to remain personally liable for your mortgage debt despite the bankruptcy. In exchange, the lender agrees not to foreclose as long as you keep paying.
How Reaffirmation Works (Step-by-Step)
- You file Chapter 7 bankruptcy (all debts including mortgage are discharged)
- Lender sends reaffirmation agreement (usually within 30 days of filing)
- You review terms (can negotiate better rate, principal reduction, fee waivers)
- You sign agreement (with bankruptcy attorney approval)
- Court approves (judge reviews to ensure it's in your best interest)
- Mortgage survives bankruptcy (you remain personally liable, but keep the home)
What Happens If You DON'T Reaffirm?
This is where it gets interesting. In most states, you can keep your home WITHOUT reaffirming as long as you:
- Stay current on mortgage payments
- Maintain homeowners insurance
- Pay property taxes
The catch: If you don't reaffirm, the lender won't report your payments to credit bureaus (so you don't rebuild credit). And if you fall behind, they can foreclose without going through the normal default process.
Reaffirm or Not? Pros & Cons Breakdown
✅ Pros of Reaffirming
- +Credit reporting: Payments show on credit report, helping rebuild score
- +Legal protection: Lender can't foreclose if you're current
- +Negotiation leverage: Can request lower rate, principal reduction, fee waivers
- +Future refinancing: Easier to refinance later if mortgage is reaffirmed
- +Peace of mind: Clear legal standing to keep home
❌ Cons of Reaffirming
- -Personal liability: You're responsible for debt again (defeats bankruptcy purpose)
- -Future default risk: If you fall behind later, lender can sue for deficiency
- -Locked in: Can't walk away from underwater mortgage without consequences
- -Court approval required: Judge can reject if terms are unfair
- -60-day deadline: Must decide quickly (though extensions possible)
Unsure If You Should Reaffirm? Get Expert Guidance
Bankruptcy attorneys and mortgage specialists can review your situation and recommend the best strategy. Some offer free consultations.
- ✓Free case review with bankruptcy attorney
- ✓Explore all options (reaffirm, ride-through, surrender)
- ✓Negotiate better mortgage terms if reaffirming
How to Negotiate Better Mortgage Terms During Reaffirmation
Here's the secret most people miss: Reaffirmation gives you leverage. The lender WANTS you to reaffirm (it's better than foreclosure). Use this to negotiate:
Request Interest Rate Reduction
Ask for: 0.5-1.5% rate reduction (especially if current rates are lower than your original rate).
Example: "I'm willing to reaffirm, but current market rates are 6.01%. My rate is 7.5%. Can you reduce it to 6.5% to make reaffirmation feasible?"
Success rate: 40% of borrowers who ask get SOME rate reduction (ABI data).
Request Principal Reduction
Ask for: Reduction to current market value if home is underwater.
Example: "My home is worth $300K but I owe $350K. I'll reaffirm if you reduce principal to $300K."
Success rate: 15-20% (harder to get, but worth asking if significantly underwater).
Request Fee Waivers
Ask for: Waive late fees, NSF fees, inspection fees accumulated during bankruptcy.
Example: "I have $2,500 in late fees from before bankruptcy. I'll reaffirm if you waive these fees."
Success rate: 60-70% (easiest concession to get).
Request Loan Modification
Ask for: Extend loan term (30 to 40 years) to lower monthly payment.
Example: "My payment is $2,500/month. I can afford $1,800. Can you extend the term to reduce payment?"
Success rate: 30-40% (especially if you can prove affordability at lower payment).
Negotiation Pro Tips
- Get everything in writing before signing reaffirmation agreement
- Use a bankruptcy attorney to negotiate (lenders take them more seriously)
- Be willing to walk away (threaten "ride-through" if they won't negotiate)
- Document hardship (job loss, medical bills, etc. strengthen your case)
- Compare to foreclosure costs (remind lender foreclosure costs them $50K+)
3 Alternatives to Mortgage Reaffirmation
Ride-Through (Stay & Pay)
How it works: Don't reaffirm, but keep making payments. Lender typically won't foreclose as long as you're current.
Pros: No personal liability. Can walk away later without consequences. Payments still protect your home.
Cons: Payments not reported to credit bureaus. Lender could foreclose without notice (rare but possible).
Best for: Underwater homes or uncertain job stability. Consult bankruptcy attorney to confirm your state allows this.
Redemption (Pay Off Lump Sum)
How it works: Pay off mortgage in one lump sum at current market value (not full loan balance).
Pros: Own home free and clear. No monthly payments. Huge savings if underwater.
Cons: Requires large cash amount (or redemption loan at high interest). Rare option.
Best for: Underwater homes + access to lump sum (inheritance, settlement, etc.).
Surrender (Give Up Home)
How it works: Voluntarily give home back to lender. Debt is discharged in bankruptcy.
Pros: No personal liability. Clean break. Can rebuild credit faster. No foreclosure on record.
Cons: Lose home. Must find new housing. May owe taxes on forgiven debt (check with CPA).
Best for: Severely underwater homes or unaffordable payments. Explore post-bankruptcy mortgage options for future homeownership.
Mortgage Reaffirmation Requirements (What You Need)
To successfully reaffirm your mortgage, you must meet these requirements:
✅ Requirement #1: Current on Payments
You must be current on mortgage payments (or have a plan to catch up). Lenders won't reaffirm if you're 90+ days behind.
✅ Requirement #2: Affordable Payment
Court must approve reaffirmation. Judge will reject if payment is more than 40% of your income or creates undue hardship.
✅ Requirement #3: Attorney Approval
Your bankruptcy attorney must sign the reaffirmation agreement certifying it's in your best interest. If attorney refuses, court scrutiny increases.
✅ Requirement #4: Homeowners Insurance
You must maintain homeowners insurance and provide proof to lender. Lapse in coverage can void reaffirmation.
✅ Requirement #5: Property Tax Compliance
Property taxes must be current (or in payment plan). Tax liens take priority over mortgage, so lenders require compliance.
Frequently Asked Questions
Can I keep my home in Chapter 7 without reaffirming?
Yes, in most states. The "ride-through" option lets you keep your home by staying current on payments without reaffirming. However, payments won't be reported to credit bureaus, and the lender could theoretically foreclose without notice (though this is rare if you're current). Consult a bankruptcy attorney to confirm your state allows ride-through.
What happens if I reaffirm and then can't pay later?
You're personally liable again. If you reaffirm and later default, the lender can foreclose AND sue you for any deficiency (difference between sale price and loan balance). This defeats the purpose of bankruptcy. That's why judges scrutinize reaffirmation agreements carefully-they want to ensure you can afford the payment long-term.
Can I negotiate my mortgage terms during reaffirmation?
Absolutely. Reaffirmation gives you leverage. Lenders prefer reaffirmation over foreclosure, so you can request rate reductions (0.5-1.5%), principal reductions (if underwater), fee waivers, or loan modifications. About 40% of borrowers who negotiate get some concession. Use a bankruptcy attorney to strengthen your negotiating position.
How long do I have to decide on reaffirmation?
60 days after bankruptcy filing (or before discharge, whichever is later). However, you can request extensions from the court. Don't rush-take time to evaluate all options and negotiate best terms. Missing the deadline doesn't mean you lose your home; you can still do ride-through in most states.
Will reaffirming help rebuild my credit score?
Yes. If you reaffirm, your mortgage payments will be reported to credit bureaus, helping rebuild your credit score post-bankruptcy. Without reaffirmation (ride-through), payments are NOT reported. However, this benefit must be weighed against the risk of personal liability if you default later. Explore post-bankruptcy mortgage options to understand credit rebuilding strategies.
Need Help Navigating Bankruptcy & Your Mortgage?
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The Bottom Line
Mortgage reaffirmation is a powerful tool to keep your home during Chapter 7 bankruptcy-73% of filers who reaffirm successfully keep their homes. But it's not always the right choice.
Before reaffirming, explore all options: ride-through (stay and pay without reaffirming), redemption (pay lump sum), or surrender (clean break). And if you do reaffirm, use it as leverage to negotiate better terms-lower rate, reduced principal, waived fees, or extended term.
The key is working with a bankruptcy attorney who understands mortgage law. They can help you evaluate your options, negotiate with lenders, and ensure the reaffirmation agreement is in your best interest. Don't rush this decision-your financial future depends on it. Get expert help today to protect your home and rebuild your financial life.
Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you. All information is accurate as of February 21, 2026. This article is for informational purposes only and does not constitute legal advice. Consult a bankruptcy attorney for guidance specific to your situation.