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Personal Loan w/ CU not part of BK...but CU has it as "Part of BK & Derogatory!"

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  • Personal Loan w/ CU not part of BK...but CU has it as "Part of BK & Derogatory!"

    Figured I'd first throw these questions on this forum to get your expert opinions before I start my research;

    First question: I'm 3 months post my chap 7 discharge. I didn't include a $12K personal loan with my CU because I didn't want to screw them over since I've financed probably 10 vehicles through them and they're a great outfit. But now something is weird? My credit report shows it was part of my bankruptcy discharge and it also has a derogatory statement!! I called to complain and to have it fixed. The loan girl who makes those updates claims she did a real-time correction to all three credit agencies. She said it will now show normal with accurate w/an on-time payment history depicting I currently owe $2,600 and in good standing. Well...it's not showing in the open accounts section on any reports? It's still in the closed account section showing as part of the bankruptcy, discharged and the words "derogatory"? I thought real-time was real-time or is she screwing w/me? How long does it take for these updates to take?

    Next and final question; I reaffirmed my Subaru loan "revolving account" to stay in good standing with them since I need to buy a new truck down the road. It only shows normal in the open accounts section w/Equifax but nothing with the other two agencies. Plus it also shows in the closed accounts section w/the words "part of bankruptcy, discharged and the word (derogatory)? I was under the impression that when you reaffirm, your account is put back to normal by the creditor?

  • #2
    First, let me be clear that while there are some bankruptcy attorneys who answer questions here, most of us are not experts, but merely people like you who have gone through or are going through bankruptcy, were helped by BKforum while going through the process and have stuck around to help others based on our own experiences and what we have learned here. The best way to get expert advice is to ask a bankruptcy attorney.

    Did you reaffirm the credit union debt, or did the court order it excluded from discharge for some reason? If neither of those things occured, the debt was discharged. The woman who told you she was updating the credit reports may not have understood that the loan was discharged and somebody may have later set her straight. If you still want to pay the discharged debt, you can if you can get the credit union to accept payment. But, the credit union is not obligated to report anything at all on your credit report. If they do report, it is correct to report it as included in bankruptcy, even if you do pay it. $12K is a lot to pay to maintain a relationship with a credit union. If you did not reaffirm the debt and the credit union will not do business with you, find another credit union instead of paying a debt you don't have to pay. Use the $12K towards the truck you plan to buy.

    Where are you getting your credit reports? If it is not directly from the credit agencies, then it may take some time for corrections to appear. Even if directly from the agencies, I would not be surprised if there was some lag time between the creditor making the change and the change appearing in the report you receive.

    If the Subaru loan truly was reaffirmed then it should not be shown as discharged. You should have Subaru correct that. Are you sure you reaffirmed the debt? Many people think that they have reaffirmed the debt by checking the reaffirm box on the statement of intentions. Did you sign a reaffirmation agreement that was filed with the court and (1) certified by your attorney to not be an undue hardship or (2) approved by the bankruptcy judge? If not, you did not reaffirm the debt.

    I do not know how a reaffirmed debt is typically reported, but it could be similar to a mortgage after a Chap 13. In a Chap 13, a mortgage on the debtor's primary residence is not discharged unless they surrender the property. My mortgage reported as included in bankruptcy during my Chap 13. After discharge, it took a couple of months for the bank to update the reports, but eventually the mortgage showed up again as being in good standing.

    Keep in mind that a creditor is not obligated to report anything at all about your accounts. But, whatever they report should be accurate. The bankruptcy will be on your credit report for 10 years after the filing date, even if these two creditors don't show up as included in bankruptcy. In time, the effect of the bankruptcy will lesson in comparison to the effects of your use of credit after discharge.

    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

    Comment


    • #3
      Thanks for you're detailed reply! The personal loan of $12K in 2015, was used by me to finish a garage/workshop project I was building for myself. I had already spent $20K on it and ran out of money so I needed more cash to finish. When I filed for bankruptcy this past June, I purposely omitted this loan from the entire bankruptcy equation. So as far as the BK court or anyone was concerned, it didn't even exist. I did this to not screw over the CU. I currently only owe $2,600 and it will be paid off soon. I filed my BK Pro Se. And I'm so glad I took this route. After attending the 341 meeting, I was so glad I didn't waste from $2K to 4K on bumbling idiots. The poor people they were representing were torn apart as a result of their lawyers not crossing their T's or dotting their I's. I couldn't believe it! They lawyers couldn't even answer questions about their case? It was unreal. Mine went as smooth as a babies butt! It was a piece if cake.

      Next; I did include the Subaru loan in my initial bankruptcy claim but decided I would reaffirm the car loan to prevent screwing up my chances of purchasing a new truck in 2018. We had a telephone conference with a BK judge, myself and the CU bankruptcy rep. The judge asked me a ton of questions and I assured him I could handle the payments no problem. He approved the reaffirmation, signed it and I received a copy. It was official. Now, since I reaffirmed it, does this mean the credit union must now remove all references to my bankruptcy, etc.? It only makes since it wasn't discharged. One thing I noticed immediately after filing; most all CC companies, CU's and banks zero'd out everything the minute they received the notice of BK sent out by the BK court. That's 2 months before the discharge even happens, yet they initiate zeroing out your accounts not even knowing if it will be discharged or not? There should be a law stating they can't do this in advance until they receive the official discharge notice. Makes me furious they can do this.

      I hope you now have a clearer picture of what I failed to convey in my previous post. On a personal note; I'm a 56 yr old retired 24 yr Air Force Veteran. I retired in 2004 and was hired right back as a DOD civil service government employee(GS-14) to continue running/managing a nuclear support function here in Montana on a nuclear missile base. We have 150 nuclear missiles in the ground ready to launch 24/7. So I'm used to dealing with very high ranking generals and civilians from the Pentagon, Space Command, etc and dealing with highly technical material/data so filing for BK myself was really a breeze. With my AF retirement @ $58K yr, and my GS-14 pay @ $118K yr, I wasn't doing too bad. But in Feb 16, my world stopped. I was diagnosed with Early Onset Alzheimer's Disease! What a shock. So I had to retire early. I wasn't gonna retire until age 62 or 63, so there goes my high paying job. I decided to take a deferred retirement instead of a DOD disability retirement which meant I had to wait until I turned 56 which happened in June of this year. The DOD is 4-6 months behind so technically I was supposed to get my first check 1 Aug. I'll be lucky to get it 1 Dec! We've spent over $100K of my government annuity (like a 401K) to survive and continue paying bills while I wasn't working, which is separate from my DOD retirement. They're combining them together for my retirement but I'll be $100K short in the calculations. But it doesn't matter because I just received Social Security Disability @ $2,200 a month. And I'll be receiving 100% VA disability @ $3,100 a month. So when I finally start receiving "all" of my retirement and disability payments, I'll still be pulling in $140K. I'll no CC debt, a $1,930 house payment, a Subaru payment of $398 and a future new truck payment. We'll be do fine financially. Currently my Transunion and Equifax scores are 700 & 715 because we had zero late payments for over 30 yrs just before filing for BK. Our debt was all unsecured credit cards and that's it. So we're nowhere as bad off as most. With only my AF retirement at the time, I barely squeezed under the min requirement for Montana to file Chap 7. I filed on 21 June and it was discharged 6 Sept...that was fast! Didn't mean to bore you but now you know a little about why I had to file and my background and where I'm coming from with this CU issue I'm dealing with. I was high 700's when I filed. One of the hardest decisions ever...but really had no choice. Maybe you can better answer my questions now since I explained it more clearer. Thanks Lady in Red!

      Comment


      • #4
        Originally posted by Edmo1961 View Post
        The personal loan of $12K in 2015, was used by me to finish a garage/workshop project I was building for myself. I had already spent $20K on it and ran out of money so I needed more cash to finish. When I filed for bankruptcy this past June, I purposely omitted this loan from the entire bankruptcy equation. So as far as the BK court or anyone was concerned, it didn't even exist. I did this to not screw over the CU. I currently only owe $2,600 and it will be paid off soon. I filed my BK Pro Se.
        When a person declares Chapter 7 bankruptcy, there is no such thing as "not including" a debt. By law, you were required to list any and all debts, whether secured or unsecured, whether dischargeable or not. Just because you failed to properly list the loan does not mean it wasn't "included" in the bankruptcy. Therefore, the credit union is within its rights (and frankly within the legal requirements) to list the account as "included in Chapter 7 bankruptcy". Of course, you can continue to pay toward any debt, and a creditor is permitted to accept such payment, but (assuming a "no-asset" bankruptcy) the loan is still discharged unless explicitly reaffirmed.

        Comment


        • #5
          Originally posted by bcohen View Post

          When a person declares Chapter 7 bankruptcy, there is no such thing as "not including" a debt. By law, you were required to list any and all debts, whether secured or unsecured, whether dischargeable or not. Just because you failed to properly list the loan does not mean it wasn't "included" in the bankruptcy. Therefore, the credit union is within its rights (and frankly within the legal requirements) to list the account as "included in Chapter 7 bankruptcy". Of course, you can continue to pay toward any debt, and a creditor is permitted to accept such payment, but (assuming a "no-asset" bankruptcy) the loan is still discharged unless explicitly reaffirmed.
          Exactly. The debt was discharged. You don't get to pick and choose.

          I suggest you contact Subaru and ask them to correct the credit reporting so that it is not shown as discharged.
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment

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