Reaffirmation and Credit Reporting

[lilgoose]

This might be of interest to a lot of us!!!

Filed Ch 7 Aug '05.....Reaffirmed a van loan.

Just found out that the loan that we reaffirmed and have paid on with on time payments for the last 14 months IS NOT BEING REPORTED to any of the credit agencies.

The lender (a well-known bank) is very pleased with our payment history with them but told us that they don't have to report any loans that were established pre-bankruptcy!!!

So, this loan officer goes on to tell my husband that in bankruptcies, there is paper work that is filed that states whether or not a lender is allowed to report to the credit agencies after filing and reaffirming a loan! There is paper work that the attorney can file to request reporting be done, but is not something that they have to do.

SO MUCH FOR HELPING TO REBUILD A CREDIT SCORE!!

So, you might want to look into established PRE-BANKRUPTCY reaffirmed loans to make sure they are being reported and what you can do if they are not.

I wish you all luck with this and hope that you are fairing better than we are on this one.

If we can't get it reported, lender has put in a request but doesn't promise it will be approved, then we will have to either refinance at a higher interest rate or take a loss on the van and try getting a different vehicle (which would be a new loan established post-bankruptcy) just so we can get our credit going again.

[SinkingFast]

I know it sux! You reaffirm with the intent of helping your Post BK Credit situation and then the Lender does not report.

I wonder,...........

Alternate Credit Reporting is getting bigger and bigger all the time. Agencies trying to bring people with little to no credit into the market place have opened doors for things like,...........

Letter of rental payment history in lieu of a mortgage reported to the CRA's.

Wonder if you could get the Lender to print out a Statement of your payment history with them. It is near the end of the year. Requesting something like this wouldn't be out of the ordinary. AND, it would give you a paper record, from the Lender, of how you've paid that acct with them. Something to show to prospective Lenders in the future.

Maybe that would help??!!

[HHM]

If we can't get it reported, lender has put in a request but doesn't promise it will be approved, then we will have to either refinance at a higher interest rate or take a loss on the van and try getting a different vehicle (which would be a new loan established post-bankruptcy) just so we can get our credit going again

Whatever you do, do not do that. If your happy with your current van, and have a good deal, DO NOT SELL IT JUST FOR THE SAKE OF GETTING BETTER CREDIT. To make a bad deal on a car so you can get a few points on your credit report would be a dumb financial move.

Honestly, the most important thing that will heal credit is time. The more time that passes from your discharge, the better.

When you say its not being reported, are you saying all evidence of the accounts existence has been removed, or they simply stopped updating the account on your credit. What is reported about the van loan on your credit report.

Also, it sounds like you are talking to the creditor, have you tried to disputing the entries, or lack thereof, with the Credit Reporting Agencies. Generally, you only contact the creditor after you have tried the usual dispute mechanisms.

[lilgoose]

Yes, we are talking with the lender, this is how we know they are not reporting.

What we were told was that ANY reaffirmed loan, even mortgage loans, ARE NOT being made to be reported.

From what we have been told and understand, there are two sets of papers one of which is from the court which denies that a loan be reported at all. The other is a set that the bk attorney is to file at the time of reaffirmation. But, we weren't told any of this nor did our atty even mention these papers that he could have filed for us.

Another thing that we found out by doing research online was that with a reaffirmed form, you can actually negotiate with the lender for either a smaller loan amount, smaller payment or even a better interest rate as part of the agreement! Wish we would have known this as we would have done some negotiating.....

As for taking a bad deal on another vehicle, no we won't do that. What I meant was that we might have to take a loss on the trade-in and do a carry over on a different one. That is if we would have to go this route and if it was too much, we wouldn't do it to begin with. But, I think we are leaning more on refinancing this same van instead.

We didn't file because of over use of cc's or getting behind...we were on time when we filed with everything. I lost my worker's comp pay and am not able to work. So, we decided with the new laws starting 2 months from the date that we did file, that we were not taking a chance and "try to hang in there" and play the "wait and try to stay afloat" game.

We are land contracting the house we are in and have just under 2 years before the contract is up...been here for 14 months now. We like the house and do want to purchase it.

Discharge was Dec '05 and we have worked on getting our credit reports cleaned up.

Approved for the Orchard cc with no deposit (14.99 % and $39 annual fee), so that will be our next step. Did read someone's use of cc's and really liked it~will use it for either groceries or gas for one of the vehicles and pay it off at the end of the billing cycle. What they did was take the money that would have been used for these expenditures each time and put it aside to pay off the card at the end of the month.

Just floored when we learned that the van was not being reported.

Hopefully the request the lender put in will be approved and the last 14 months of positive payments will be reported and the rest of the loan as well.

Oh, will do the letter thing with the company we are land contracting from.

[HHM]

You still didn't answer my question...have you actually seen your credit report lately. If not, go pull a copy and find out what exactly is on their. If the debt existed before BK, there will be something on your credit report...accounts don't simply disappear off a credit report. Where you get leverage in this types of dispute is on "accuracy". Creditors are required to accurately report an account, so if the account is on your credit report, they need to accurately report it.

Also, this thing about two documents being filed with court is total BS. A reaffirmation works as thus...creditor sends reaffirmation agreement, (if you agree with the terms), you sign it and send it back to the creditor. The creditors files the reaffirmation agreement with the court. There is typically no other document that is associated with the reaffirmation agreement. However, a careful attorney may insist that reaffirmation agreement contian a provision that requires the creditor to continue to report the account on the debtors credit report. However, even if the reaffirmation agreement does not contian such a provision, the creditor is not excused from having to "accurately" an account that already exists on the debtors credit report.

And yes, you can, sometimes, negotiate a better deal on reaffirmation agreements, but that is becoming rare because the new law basically requires reaffirmation agreement. Prior to the new law, a debtor could elect to have the debt ride through the BK, (which would allow the debtor to walk away from the property any time in the future without being liable for a deficiency balance), but the debtor no longer has the ride through option as leverage for negotiation.

Also, regarding the van, unless you can refi to less than a 2% interest rate (which would never happen anyway), or refi for a term that is the same length as what is left on your current loan, otherwise a refi on will cost you more in the long run than simply paying off the vehicle under your current terms and conditions.