reaffirm unsecured LOC?

[lostinmich]

I had my 341 meeting the other day and everything seemed to go as planned. A few extra questions from the trustee but I think that was due to the fact that it was a failed business that caused all of my financial problems.

What's next? Just a waiting game? Will the trustee contact me for more info?

Also, I don't know if this is possible but I'd like to find out some info.... I have had a good relationship with my credit union until my financial difficulties arose. I had a $5000 line of credit that was maxed out and is included in the BK. Would it be possible to work out a deal with the credit union to pay the debt with some stipulations? For example...

The credit union would agree to not charge any interest for 2 years if I reaffirm the $5000 debt.
I would be given a credit card with a $2000 limit.
I would be allowed to have a checking account.

Not even sure if this is something that the trustee would go for let alone the credit union. My thinking here is that I get to keep my good relationship with the credit union, I have an open CC, and I have a checking acccount. The loan and the CC would help build up my credit rating. Seems like a win-win. Am I wrong?

[HHM]

You "could" reaffirm, but I think you're terms are a bit over-reaching, but I suppose anything is "possible".

The trustee has nothing to do with Reaffirmation agreement, it is the bankruptcy court judge who oversees the reaffirmation process.

However, it is generally not worth it to reaffirm unless you have too, and the court may not go along since all you want to do is maintain a relationship with the bank. (i.e. the court may reason that if that were the case, why didn't pay off that LOC).

As for the terms, I think you can scratch "being given a credit card", and "being allowed to have a checking account"...those are separate issues from the reaffirmation process and unrelated to the debt. As for interest, nearly all reaffirmations have the creditor cease charging interest until the balance is paid off, also, you can get the balance reduced. In your case a typical reaffirmation would be $2,500, paid off in 12 months or less, no interest. (but of course, that assumes the court lets your reaffirm in the first place).

[lostinmich]

You "could" reaffirm, but I think you're terms are a bit over-reaching, but I suppose anything is "possible".

Over-reaching meaning you wouldn't expect the CU to agree to those terms?

The trustee has nothing to do with Reaffirmation agreement, it is the bankruptcy court judge who oversees the reaffirmation process.

Thank you for clearing that up. I assumed that the trustee was the one that handles all of the BK stuff and that the judge just 'gives their stamp of approval'.

However, it is generally not worth it to reaffirm unless you have too, and the court may not go along since all you want to do is maintain a relationship with the bank. (i.e. the court may reason that if that were the case, why didn't pay off that LOC).

Yeah, I can see that it's generally not worth it to reaffirm. My reason isn't just the relationship, it's the ability to start building some positive credit reporting too. As for paying the LOC off, if I had that kind of money I likely wouldn't have had to file in the first place. I kept up my payments until my lawyer said to stop paying EVERYONE. I'm sure it's the same for most people... they don't intend to get to this financial place but it happens. I feel bad.. sick to my stomach.. I wish I would have never had to do this.

As for the terms, I think you can scratch "being given a credit card", and "being allowed to have a checking account"...those are separate issues from the reaffirmation process and unrelated to the debt. As for interest, nearly all reaffirmations have the creditor cease charging interest until the balance is paid off, also, you can get the balance reduced. In your case a typical reaffirmation would be $2,500, paid off in 12 months or less, no interest. (but of course, that assumes the court lets your reaffirm in the first place).

So can terms such as getting a CC and being allowed to have a checking account something that can be included in a reaffirmation agreement or are they strictly for monetary issues only?

[HHM]

Over-reaching meaning you wouldn't expect the CU to agree to those terms?

Yes, that is what I mean.

I understand why you want to (building credit etc), I am just not sure the court will view those as sufficient reasons. Most of a time, when a debtor reaffirms an unsecured debt, it is because the creditor has a plausible case to object to the discharge of the debt in the first place...thus, the creditor and debtor will do a reaffirmation to avoid fighting it out in court. Other than than, reaffirmation agreements just aren't done on unsecured debt.

Regarding the specific terms you mentioned, I suppose there is no "technical" restriction on the terms of a reaffirmation agreement. I think the main reason you wont get those terms is I don't think the bank is going to go out of it's way...meaning, there are different people within the organization that handle making the decision about checking accounts, and offering credit cards. Also, since a reaffirmation must be completed before discharge, and no person can offer you credit before discharge, the request for the credit card is out of the question (even if the bank were to wait until after discharge to give you the credit card, the reaffirmation is a binding agreement and would still be an offer of credit if it included a term regarding a credit card).

Also, you will be able to get credit cards pretty quick (go look in the rebuilding credit section of this forum, it is not a problem to get credit cards after BK).

However, it never hurts to ask, and who knows, maybe they will agree.