Read on to learn more about the pros and cons of confirmation agreements and what happens if you decide not to validate your mortgage after the insolvency declaration. A confirmation agreement is an agreement between the debtor and the creditor, in which the debtor agrees to repay the obligation contained in the bankruptcy proceedings. If the confirmation agreement is not executed, the debt will be legally discharged after the bankruptcy closes. If a confirmation agreement is signed and is not revoked before the closing of the proceedings, the confirmed debt remains and remains an obligation to be paid regardless of the declaration of insolvency. Most claims relate to debts with security – mainly vehicles and other personal property, although for houses, as described below. Creditors often need a confirmation agreement if you want to keep the guarantee. Not only do you want very strong assurances that you make the payments you promise, they also want to be able to sue you if you don`t. In particular, creditors want not only the right to recover collateral (which they can do without confirmation), but also to be at your mercy as long as the sale of collateral does not settle the debts (the “default judgment”). For a confirmation to be valid, you must sign a “confirmation agreement” and be filed in bankruptcy court. It must also be approved and signed by your OR bankruptcy lawyer must be approved by a bankruptcy judge at a “confirmation hearing” that you must participate in. (Although confirmation agreements may be submitted in chapter 7 and Chapter 13 “Debt Adjustment,” they are primarily used in Chapter 7. In Chapter 13, secured claims are generally satisfied before the end of the case. Confirmation is not required, as no additional debt must be confirmed.) It is frustrating that lawyers who lack bankruptcy experience come to court to get approval for a confirmation agreement.
It is clear that inexperienced bankruptcy lawyers who do not appreciate the impact of implementing the confirmation agreement could assign a debtor who has filed for bankruptcy to obtain a fresh start. It is extremely important to have an experienced lawyer to protect your interests to ensure that the goal of a fresh start is achieved after the bankruptcy proceedings are closed. Do you still have questions about your mortgage rights during bankruptcy? For more answers, click here. If you own a home and file for bankruptcy under Chapter 7, your lender may ask you to sign a confirmation agreement.