A confirmation agreement is a document you sign that “confirms” your commitment to repay the loan related to the agreement. Some lenders may require this agreement because of your insolvency declaration. If you file for bankruptcy when you receive relief, the discharge ends your personal responsibility to repay these debts. If you want to keep the vehicle and you owe money and stop making payments, the lender of that loan has the right to repossess the vehicle. Even in bankruptcy. This may take a little longer to go bankrupt, but if your lender is a pawnholder on the title of your vehicle, you must pay the credit to keep the car. Therefore, if the lender has to repossess the vehicle, if you return to a difficult period and you no longer make payments, they can send the balance or the difference between what you owe the loan and its sale price, reduced by the cost of the vehicle at an auction, to recover that balance. (2) After filing your bankruptcy forms, you must send the intent form to your car lender. You should also call your lender and speak to the bankruptcy department. Ask them to send you a confirmation agreement. Bankruptcy law requires a Chapter 7 debtor to decide what he or she wants to do with debts secured by personal property such as auto loans. The debtor must either “keep the property and assert guilt,” “cash in” (i.e.
keep the car and pay for everything at once) or “abandon” the car. If the debtor wishes to keep and/or must keep his car in a Chapter 7 filed in California, which is most often the case, the lender can ask the debtor to sign a confirmation agreement. A confirmation agreement effectively forgoes its bankruptcy relief with respect to these debts. The purpose of a confirmation agreement is simple. It gives a creditor the opportunity to sue you in the future, even if you got a discharge in Chapter 7 of bankruptcy. Therefore, any lawyer for the bankruptcy of a debtor should be hostile to any confirmation agreement. Before you opt for the best procedure for your confirmation agreement, contact your local lawyer. Once you know your options, you can make an informed decision, which is in your best interest.
For more information on dements, please see:Confirm your vehicle in Chapter 7 of A or what I should expect at my confirmation hearing? A confirmation agreement creates a new binding contract in place of the original car loan. The reason why a confirmation agreement is a potentially disastrous contract for the Chapter 7 debtor is simply this: if, in the absence of a confirmation agreement, you have experienced difficult times, after your bankruptcy proceedings have been closed in Chapter 7 and your car payments have resulted in a default, the lender could repossess the car. The lender still has a pawn on the car. But what is important is that they could not sue you for the “lack” between what you then had and the value of the car. A confirmation agreement establishes a brand new contract, binding after bankruptcy, which allows the lender to sue the creditor in the event of withdrawal after its bankruptcy. You simply sign a confirmation agreement because most vehicle rental companies require you to keep the vehicle. If this is the case, you would prefer to keep the vehicle without confirming the credit. This is called the “Ride Through” option. You would simply continue to make your monthly payments for the loan, keep the insurance up to date and once you have paid the loan, you will receive a free and clear ticket for the vehicle. But if you couldn`t pay at any time or decided that the vehicle should no longer be retained, you could simply abandon it and have nothing to do with it.
You would not be liable because the debts for the vehicle loan would have been commended in the bankruptcy proceedings, since you had not signed a confirmation agreement excluding this discharge credit.