Reaffirmation Agreement Definition

The current confirmation requirements expressly require a solicitor-in-sworn statement that the proposed confirmations do not cause unreasonable severity to their clients. Recent practices suggest that some lawyers sign these assurances under oath with little or no attention to this requirement. Honorary President John Akard of Texas wrote to the Commission in the final days of the preparation of this report to present a confirmation agreement signed by debtors in court. The agreement required them to repay a loan on a pick-up truck that cost 18,027.71 $US over 15 years. In the event of an interest rate, debtors would pay a total of $42,861.84. Akard J. asked counsel for the debtor on the length of the payment, at that time «lawyer admitted to neglecting this fact.» Loans on almost all conditions would be greater than the economic reality of these conditions. Nevertheless, counsel for the debtor had signed the affidavit stating that the debtor had been fully informed of the consequences of the proposed confirmation and that counsel believed that the agreement would not impose inappropriate severity, when the debtor already had a negative monthly cash flow of more than $750. (333) When Congress was originally debating the inclusion of the assertions in the Bankruptcy Act 1978, members did not talk about using the assertion as an instrument of collection. Repayment of creditors should be made as part of a collective, cheap, effective and fair repayment plan for Chapter 13, in accordance with specific legal priorities.

However, some creditors are doing much better by using confirmations than in Chapter 13 repayment plans, in which they should share the debtor`s future income with other creditors. 333 Id. See also In re Hovestadt, 193 B.R. 382 (Bankr. D. Mass. 1996) (confirmed debts would lead to negative cash flow on time, yet counsel signed an affidavit stating that confirmation would not cause inconsequentical severity). See also letter from Hon. Arthur J. Spector, Bankruptcy Judge, E.D.

Me. to Melissa Jacoby, (May 20, 1997) (provision of audiotapes and transcripts of confirmation hearings with multiple confirmations exceeding debtors` ability to pay); In re Lantanowich, 207 B.R. 326 (Bankr. D. Mass 1997) (the debtor agreed to repay $1,000, plus interest, to obtain a $200 line of credit). Back to the Text The American Bankruptcy Institute Consumer Bankruptcy Forum, made up of representatives of debtors, creditors, judges, academics and trustees, unanimously asked the Commission to recommend that all leases be considered eligible secured claims and not as contracts or leases. (398) In particular, this was one of the few themes of the ABI forum on which all parties agreed. (399) The secured and unsecured creditors who participated in these interviews expressed concern about the favourable treatment of the leaseholders, which was based on the ambiguous nature of the transaction under state law. They indicated that the economic consequences of characterization would be extremely relevant to a debtor`s other creditors.

If the transaction is identified as a security/tempered sale interest, the creditor would be treated like other secured creditors. 350 Visa Consumer Bankruptcy Reports, Consumer Bankruptcy: Bankruptcy Debtor Survey 12 (July 1996). Professors Culhane and White report that 28.1% of debtors had one or more confirmations in their files. Culhane – White, Creighton Reaffirmation Project, Table 19 (September 23, 1997). Return to the text Non-bankruptcy law generally defines the extent of material interests such as property rights, contractual rights and illegal acts. (391) Some rights are difficult to characterize by domestic law or otherwise, but the definition will make a significant difference in the positions of the bankrupt parties, who compete for a limited set of resources.