Part of the required documents for a Chapter 7 debtor to complete as part of a bankruptcy filing is the Statement of Intention. In the Statement of Intention, the debtor declares what he intends to do with his secured debts, which is typically a car loan or a home mortgage.
The debtor will usually declare that he will want to reaffirm, redeem or surrender the loan and collateral.
It is important to note that the debtor’s statement of intent is only that- a declaration of intent. People don’t always live up to their intentions, so this statement is not binding. Actual action is required in order to make it binding.
The debtor is required under 11 USC 362(h) to act on his stated intent to the creditor within 30 days of the meeting of creditors. The deadline to have either reaffirmed or redeemed set by 11 USC 521(a)(6) is within 45 days of the meeting of creditors
This means that if the debtor wants to reaffirm his car loan, he has to actually sign and deliver the completed reaffirmation agreement to the creditor within the allotted time. If perhaps the debtor wishes to redeem the car instead of reaffirming, he must also file the motion in the appropriate time.
The point is the debtor has an obligation to perform in a limited amount of time. Should the debtor fail to do so, there will be consequences.
For example, consider the scenario where the Chapter 7 debtor is current on his car loan even three months after filing Chapter 7, but has not signed a reaffirmation agreement. The automatic stay will expire as to their car even if the debtor is current and intends to reaffirm, because it expires 45 days from the meeting of creditors. The debtor in that case could see the car repossessed (note that there might be state law protections beyond bankruptcy available to the debtor).
However, remember it cuts both ways. If the debtor intended to reaffirm but never did, the debtor is not on the hook for the debt post bankruptcy discharge. Therefore, if the debtor later defaults, he will not have personal liability if no reaffirmation agreement was ever signed, even if he intended to reaffirm.