Question Regarding Reaffirmation and Credit

[bob11]

Here is my situation... I will be filing for Chapter 7 bankruptcy in the next few days. I will be filing alone as my wife does not share in any of the outstanding derogatory debts I have accumulated. However we do have a vehicle financed together in which she is the primary and I am the co-signer. All payments have been made on time and we have never missed a payment.

What I would like to know is how reaffirming on this auto loan will show up on her credit report. We will be buying a home within the next year and a half, so I don't want to do anything that will negatively effect her credit. I asked my attorney and she stated that it would not show up at all on my wife's credit report. However, she also asked another attorney in her office and he stated that it would state that the co-signer had reaffirmed through chapter 7 bankruptcy on the report.

I would greatly appreciate any information on this subject. I have also searched old posts, but was unable to find anything pertaining to this specific question. Thank you in advance!

[Minnymouth]

Yes it will show up as a "re-affirmed in bankrupty" on the credit report....... It will probably also say - paid at agreed - which is a good thing!!

[SinkingFast]

Intermingled people's credit often shows on the other's Credit Reports. We have CC's where either Hubby or I am the primary and the other is an Authorized User. All those accts show on both our credit histories.

It wouldn't be surprising, as Minny has already said, for your BK to show on your wife's credit report.

[keepmine]

If the non filing spouse has the bk of the other spouse on their report, they need to dispute it.
A few years ago, the 3 CRA's settled a class action suit on that issue. The following link is not an easy read but, they must either not report it or if they do, they must make sure it states something to the affect that it was included in the bk of another.

http://www.myfaircredit.com/forum/viewtopic.php?t=2103&sid=375072441273941ce861383542fe961b

[StaciMM]

One thing to keep in mind, unless your spouse has enough income on her own to qualify for the house without you being on the loan at all, then any mortgage loan will review the credit of both of you. That doesn't mean the end of the world though. I expect to get a mortgage on my house at the end of the summer, just shy of 1 year post filing.

[bob11]

Thank you all so much for the information. I think I will go ahead with it and just check my wife's credit report after the discharge to verify that everything is as it should be. Would it be a better idea to refinance the loan in just my wife's name prior to filing the BK?

[keepmine]

Would it be a better idea to refinance the loan in just my wife's name prior to filing the BK?

No, because {a] it'll look like a transfer of assets and {b} if your name is not on the loan, the trustee may well disallow the expenses associated with the car {loan repayment and maintence, gas,etc} because you have no legal obligation to pay the note.
If you're filing soon, make no property transfers unless your lawyer says it's OK.

[SinkingFast]

Yep. You have to declare all property transfers made within the last year prior to filing.

Taking your name off a loan, and refinancing prior to filing BK could look like a preferential transfer of an asset to an Insider. Your wife is an Insider.