John arranges a new confirmation with his mortgage company, which is approved by the court. He reaffirms the debt he owes for the real estate mortgage with the possibility of renegotiating payments with the lender. He and his mortgage company agree on a monthly mortgage payment or lower interest rate during the confirmation process. John is able to cope with these lower payments with a few side jobs he has been able to find. Since the finance company, credit union, or bank that owns the pink panties in your car can force you to do so, that`s why. In Chapter 7 bankruptcy cases filed in California, the lender may repossess your vehicle if you refuse to sign a reconfirmation agreement. But even if you sign one, a Chapter 7 re-settlement agreement must be filed in the event of bankruptcy, and it must be approved by the bankruptcy court. This requires a separate hearing before your bankruptcy judge, where the judge will ask you questions about how you can afford to pay for the car and whether the reconfirmation agreement will impose “unreasonable hardship” on you. Reconfirmation is a type of agreement that a debtor enters into with a lender to repay some or all of the debt even if it has been the subject of bankruptcy proceedings. When a person files for bankruptcy, they do so in order to be relieved of a debt burden that they cannot pay. Some borrowers want to continue their loan payments without going through the formal confirmation process.
However, confirmation has some advantages for the borrower. When a borrower acknowledges a debt, it is noted by credit reference agencies, which then record that the person makes regular payments on time. Reaffirmation agreements do not benefit debtors. They only benefit secured creditors. Indeed, their purpose is to enable secured creditors to recover the unsecured portion of an otherwise secured debt after repossession. For example, if you have a car loan with a balance of, say, $20,000 and the car that guarantees the loan is only worth $12,000, the unsecured portion of the debt is $8,000. You should only enter into a stand-by agreement if you reasonably believe that you can pay the balance. Another way to look at it is not to log out if you could replace the property for less than you owe. An alternative to a confirmation contract is to buy back the property at its current value. The catch is that you need to have access to a flat rate that many people don`t have.
One. The debtor will not be represented by a lawyer in his bankruptcy case (but if you have a lawyer and he does not sign your reconfirmation agreement, the court will schedule a hearing); A stand-by agreement is a binding contract, and as such, you should carefully weigh the costs and benefits before entering into one. Another way to protect your assets is to enter into a “reconfirmation agreement” with the creditor. Affirmation agreements filed in prose debtor cases (i.e., that the debtor is not represented by a lawyer) are always scheduled for a hearing to ensure that the debtor understands the consequences of a reconfirmation agreement, that the agreement is voluntary and to determine whether the debtor is able to maintain payments for the debt to be reasserted and/or whether the stand-by agreement is in the best interest. of the debtor. The confirmation prevented John from having to forcibly close his house. However, if he does not make the mortgage payments under the new conditions, the lender will take possession of his house and start a foreclosure procedure. Chapter 7 bankruptcy relief would release you from personal liability for the unsecured portion of the debt. This means that the lender could never sue you for the $8,000 in our example above. Of course, an unloading under Chapter 7 does not remove the lien on the vehicle. Chapter 7 will not give you the car without refunding the privilege.
But this would prevent the lender from suing you in the future if you could not repay the car in the future after your bankruptcy. In other words, if you lose your ability to pay for the car after receiving a Chapter 7 layoff and the lender repossesses the car, or if you simply voluntarily gave up the vehicle after receiving your release from bankruptcy, the lender would be prevented from suing you for a balance due, after selling the car at auction. Enter the affirmation agreement. A stand-by agreement must be submitted to the court to prove written acceptance of the new debt. These agreements are usually drafted and filed by the creditor`s lawyer. Affirmation agreements are also subject to court approval, and the judge may reject an agreement for a variety of reasons, including if they feel you can`t afford it, if the debt significantly outweighs the current value, or if interest rates are too high. The good news is that most of the largest auto lenders have given up on insisting on a stand-by arrangement in recent years. For the most part, they realized that many of our bankruptcy judges will not approve them, and in the end, most Chapter 7 debtors successfully repay their auto loans after bankruptcy. The Bankruptcy Act requires a Chapter 7 debtor to choose what to do with debts secured by personal property, such as automobile loans. The debtor must either: “keep the property and affirm the debt”, “buy back” (i.e.
keep the car and repay everything at the same time) or “return” the car. If the debtor of a Chapter 7 filed in California wants and/or must keep their car, which is most often the case, the lender may require the debtor to sign a reconfirmation agreement. A reaffirmation agreement effectively cancels its relief from the insolvency debt in respect of that debt. It is in the borrower`s interest to go through a legal process such as reconfirmation if they wish to resolve or manage financial obligations. You can protect certain items up to a certain amount in dollars by using exemption laws. As such, insolvency exemptions function as an integrated protection. Debtors are generally able to avoid the return of most, if not all, of the assets through the appropriate use of exceptions. If you are filing a single Chapter 7 bankruptcy case, it is important to understand which exemption laws apply to protect most of what you own. All judges allow debtors who appear to be prose to appear by telephone for stand-by agreement hearings. More information on telephone appearances can be found on the designated judge`s website. A stand-by agreement is a contract that you can enter into in which you agree to remain liable for a debt so that you can retain ownership of it.
In other words, it`s a promise to pay in exchange for keeping the property you want to keep. .