John has arranged a confirmation with his mortgage company that will be approved by the court. It reaffirms the debt it owes to the mortgage of the house, with the possibility of renegotiating the payments with the lender. He and his mortgage company agree during the confirmation process of a lower monthly mortgage payment or a lower interest rate. John can make those lower payments with a few odd jobs he could find. Bankruptcy lawyers are often sent after J.C. mortgage bond confirmation agreements due to the debtor`s home and other real estate for investment or leave purposes. The question is whether counsel should authorize the execution of the confirmation agreement. Under California law, a default judgment can generally be sued by mortgage lenders who hold second or third mortgages. This is why these lenders are much more interested in processing a confirmation agreement in bankruptcy court. The note, the promise to repay the money you borrowed, is unloaded by the operation of the bankruptcy law.
The alliances remain in the mortgage. As a practical result, while you do not owe the money you borrowed, based on the promises in the mortgage, if you do not continue to make monthly payments, the lender will initiate a forced enforcement procedure. It should come as no surprise that lenders do not like this situation because the promise of payment contained in the note has disappeared and the lender has lost the ability to recover a defect if the house is sold in the event of a forced sale for less than the sum of the loan. The only way the lender can accept the amount of money the house brings to an auction. (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.) The main reason a creditor wants confirmation is the maintenance of the debtor`s right to sue for the notice of default. But under California law, a creditor who closes a first mortgage on a building is almost never entitled to a default judgment.
When it applies the much more frequent extrajudicial enforcement procedure, it clearly has no right to make an adverse judgment. If he uses a court foreclosure, there is no right to default if the house itself is used and the proceeds of the loan have been used to purchase the house (as is the case with most first mortgages). Some borrowers want to continue to pay their loans without going through the formal confirmation process. However, there are some benefits to the borrower of confirmation. When a borrower confirms a debt, this is seen by lending agencies that register while the person regularly makes payments on time. 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.