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. A confirmation agreement must be submitted to the court to show written acceptance of the new debt. These agreements are usually drafted and filed by a lawyer for the creditor. Affirmation agreements are also subject to judicial authorization, and the judge may refuse an agreement for a number of reasons, even if they think you cannot afford it if the debt significantly exceeds the current value or if interest rates are too high. A confirmation agreement is a binding contract and, as such, you must carefully consider the costs and benefits before supporting one. The agreement on the assertion is voluntary and cannot be coerced by the creditor to conclude such an agreement. Any agreement must be concluded before receiving your discharge at the end of the case and submitted to be valid. Confirmation agreements do not benefit debtors. They only benefit secured creditors. Their purpose is to enable secured creditors to recover the unsecured portion of an otherwise guaranteed debt after the withdrawal. If you have a car loan with a balance of $20,000.
B.B and the car in charge of the credit is worth only $12,000, the unsecured portion of the debt is $8,000. A discharge in Chapter 7 bankruptcy would relieve you of your 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 Of course, in the event of a Chapter 7 discharge, the right to pledge to the vehicle is not withdrawn. Chapter 7 doesn`t give you the car without paying the pledge. But that would prevent the lender from suing you if, in the future, you could no longer pay for the car after your bankruptcy. In other words, if you have lost your ability to pay for the car after receiving a Chapter 7 rebate, and if the lender has withdrawn the vehicle or if you simply abandoned the vehicle voluntarily after receiving your bankruptcy, the lender will be prevented from suing you for a balance due after the vehicle is auctioned. Enter the confirmation agreement. Second, you don`t want to be responsible for your vehicle loan – and therefore not sign a confirmation agreement – if you wanted to keep the vehicle but were concerned about the risk that you would have to deposit it in the future, and then you would be left as a result of a sum of money – that deficit mentioned above.