what's the difference??

[Flaminblonde]

What is the difference if you include your vehicles or other items you intend on paying, but do not reaffirm, when doing a Ch 7? I don't understand. If you include it...doesn't it mean that you have to give it up? IF you're current...and you don't reaffirm...but later decide to give it up...does it fall under the original bankruptcy? I'm a little confused.

I have been current on my car payments....so I was told by others I shouldn't reaffirm because I don't have to...but if I don't...doesn' that mean that later if I give it up (no plans) that they can send me to collectors and sue me for the deficiency? My lawyer says I should just reaffirm. But if I don't have to....wouldn't it work out for my best interest SHOULD anything happen down the road?

Thanks!

[HHM]

There is a lot of confusion about this word "included" in bankruptcy, and infact, its really the wrong word to use. The distinction is really between "listing" and "discharged".

Your duty under the bankruptcy code is to list ALL your interests in property, of whatever kind, and ALL your liabilities. Think of it this way, the bankruptcy petition is a snap shot of your ENTIRE financial life, all your property, income, liabilities, etc.

The bankruptcy code takes care of the rest regarding what gets "discharged" and what doesn't. Secured debts are treated differently in bankruptcy than unsecured debts. The bankruptcy code generally allows a secured creditor to get the benefit of their lien (i.e. their secured status). Thus, if you are behind on payments and can't make up the payment, in a chapter 7, the secured creditor gets to repossess the property. However, if you continue to make the payments, the secured creditor is not harmed and they are receiving the benefit of their secured status.

Reaffirmation agreements really only benefit the creditor because if you sign one, its as if your BK never happened vis-a-vis that particular creditor, so if you default in the future, you are still liable for the entire balance of what you owe and the secured creditor gets the property back. Whereas, if you simply keep paying on the secured loan, and then default in the future, (yes, the company gets the property back), but they cannot go after you for a deficiency balance). The only real catch to not doing a reaffirmation is that the Secured Creditor can list the debts as "included in BK" on your credit report instead of reporting it as "paid as agreed".

[akgirl]

Our lawyer advised us against signing any reaffirmation agreements because that creates a new debt. We have two car payments and we decided to keep both vehicles. We did not sign a reaffirmation on either one. One credit union did list the loan as included in bankruptcy on our credit report but we called them and were told that if we disputed it, they would confirm to the credit report companies that we are current on our payments. Who knows if they will keep their word, though. It is my understanding that a reaffirmation only benefits the bank or credit union, not the person filing for bankruptcy.

[davidb81]

I stated in my bk that I was going to continue to pay my auto loan. I was current so there was no need to reaffirm. So the lender quit sending me statements, I figured that it was because of the bk and the statements would resume once discharged. When I mentioned it to my attorney She said actually they do that because they are ticked off that you dont reaffirm and they would likely never send me another statement again. Which I think should be illegal because I should be able to see a monthly statement to see what my balance is. I'm going to try to call them once I am discharged to see if they will start sending me statements again. has anyone experienced this??

[HHM]

I stated in my bk that I was going to continue to pay my auto loan. I was current so there was no need to reaffirm. So the lender quit sending me statements, I figured that it was because of the bk and the statements would resume once discharged. When I mentioned it to my attorney She said actually they do that because they are ticked off that you dont reaffirm and they would likely never send me another statement again. Which I think should be illegal because I should be able to see a monthly statement to see what my balance is. I'm going to try to call them once I am discharged to see if they will start sending me statements again. has anyone experienced this??

Yeah, I have seen it happen on mortgages in Chapter 13 cases. GMAC Mortgage is a big offender here. They stop sending mortgage statements once you file BK and never send them again. The reason they gave is, "sending statements is courtesy, not a requirement"

[glaciercats]

Same thing happened to me through Center One Financial. They stopped sending me statements on my car loan. When I asked for them they said I would have to sign a refirmation agreement to get a statement.

[CCareEvil]

Our attorney advised that a benefit of reaffirmation is that the lender might be more helpful/understanding if you ever have trouble making a payment. This would mostly apply to a mortage.