What is an executory contract and why must I assume or reject it?
Executory contracts are unfulfilled contracts whereby each party to the contract has remaining obligations. A typical example of such contracts is a lease for property, such as a home or a vehicle, or a rent-to-own agreement. In bankruptcy such contracts must be “assumed” for the debtor to continue to have rights under the agreement. As with reaffirmation agreements and redemption, the debtor must take timely action to assume his or her executory contracts, otherwise the contracts may be deemed “rejected” and the automatic stay may be lifted.
