At the end of a Chapter 7, the debtor receives a discharge from the court that releases the debtor from any personal liability for the debt, unless the debtor decides to reaffirm his personal liability by a confirmation agreement. Under 11 U.S.C§ 524 (a) (3), a dismissal acts „in summary proceedings against the initiation or continuation of an action. unless the debtor enters into an agreement with the creditor in accordance with Article 524(c) to confirm his personal liability for the secured debt. This agreement must be in writing (1) and before discharge is granted; (2) receive the information required under Article 524(k); (3) filed with the court; (4) (if applicable), accompanied by a statement or affidavit from the lawyer who represented the debtor during the contract negotiations; (5) indicate that the debtor has been fully informed and that the agreement is voluntary; (6) such an agreement does not impose unreasonable harshness on the debtor; and (7) that the lawyer confusing the debtor has fully drawn the debtor`s attention to the legal effect. The debtor has 60 days to terminate the confirmation agreement as soon as it has been filed in court or before the dismissal. If you sign a stand-by agreement and one of them happens, the creditor can sue you to collect the balance. A new confirmation is not always the best idea and should be taken with a true understanding of what is expected of you and the options of creditors if you do not meet your commitments. Confirming arrangements are generally used for secured debts, as such agreements allow the debtor to retain the security rights and preserve the creditor`s right to assert the debt under contractual or modified terms. If the secured debt is personal property (i.e.: Under bankruptcy law, the debtor may be incentivized to confirm the debt. In accordance with Article 521(2)(a), a debtor must submit to the court, within thirty days of the filing of the application or before the first day of the meeting of creditors, its memorandum of understanding indicating whether the debtor intends to confirm or honour the asset in question for each secured debt. In this context, in accordance with Article 521(2)(b), the debtor has 30 days after the first date of the meeting of creditors to fulfil his declared will. With respect to personal ownership (i.e. a vehicle loan), the debtor cannot retain ownership of the property unless the debtor enters into a repeatability agreement within 45 days of the first meeting of creditors.
In other words, if a debtor does not confirm a vehicle loan, the creditor has the right to take back the vehicle. Although the creditor cannot withdraw money from the debtor, he can take the vehicle. This is the reason why the affirmation of a car loan can be timely. The creditor also has to pay to close the house or repossess the car, which is expensive, so if the creditor insists on a stand-by agreement, then the creditor could get stuck with the collateral and not receive payments.