My reafirmation hearing experience.

[Pappas]

I went through my hearing for a car loan reafirmation on Monday, and I wanted to share the info with those that have not gone through it yet.

Some details: My wife and I are a chapter 7 no asset case. We are reafirming a car loan with BB&T bank. Before everyone goes nuts about the pitfalls of reafirmation and why we should never do it, our reasoning is as follows:

The vehicle is in excellent condition and 2 1/2 years old.

We owe $3900 and the value is $9500

We have a (very affordable to us) $225 payment for about 1 and half years.

And family has already pledged to pay it off should we have an issue.

Based on this it seemed like a very low risk to reafirm, and a greater risk to not and have them come get it even though we keep paying. It was just not worth losing this particular vehicle. I really wish they would change the law to allow stay and pay for vehicles they way they do for houses. The current rule allows the lenders to bully the debtors with reposesion even though payments have been current and will continue to be current, but thats another story

So heres what happened. We arrive at the courthose 30 minutes early and sat down. For the next 30 minutes lawyers filled in and out speaking to one another and the court clerk. The clerk read off a list of cases and when he came to ours asked if we were present, which we indicated we were. We have an attorney, but I elected to not give him any more money to represent us for such a cut and dry hearing, so we represented ourselves. After this reading off of the list the clerk said he would return with the judge.

We waited for 10 minutes and the judge entered. She called all of the reafirmations first, and asked everyone some very simple questions:

1. Why are you reafirming?

2. Are you doing this of your own free will?

3. Do you understand what reafirmation means?

4. Do you understand the consequences of defaulting on a reafirmed debt?

She then went on to explain to every debtor that should she approve the reafirmation, they would be responsible for the payments. Should they default they could be sued for the remaining amount with no protection from the bancruptcy court. She asked everyone if they understood.

She then reviewed the debtor's financial situation and the terms of their particular reafirmation and made a ruling. The entire proscess for each debtor took no more than 5to 10 minutes. It seemeded to me that the judge was looking for the following to approve the reafirmation:

1. Less than 2 years of payments, with a payment that fit easily into your budget.

2. A vehicle that was fairly new, and worth alot more than was owed to the lender.

3. A debtor that had some sort of contingency plan in case they lost their income. She accepted help form parents, selling the vehicle, or using savings to pay off the loan.

Anyone not meeting these requirements was almost immediately denied. There were even people who had 2 loans they were trying to reafirm where one lone was and the other was not.

The most encouraging thing I saw was that to all the debtors who were denied, the judge noted on their case that she awknowledged they had made every attempt to reafirm, and the denial could not reflect negatively on them. She told them they could continue to stay and pay with no recourse for the lenders to reposses. She also explained that they would not be protected should they fall behind on payments.

I hope this post helps some of you. We were approved based on the above circumstances, and are relieved we will not be losing this vehicle, as we really need it for work. If anyone has any questions, I will do my best to answer.

[IamOld]

THANKS very much for posting this for everyone!

[InOverHead]

She told them they could continue to stay and pay with no recourse for the lenders to reposses. She also explained that they would not be protected should they fall behind on payments.

Just so im sure i understand, this means you continue to make payments but at any time the lender could be a jerk and repossess? Is the lack of an ability to do a stay like in a home situation state specific? I am reaffirming multiple vehicles and the attorney has said nothing about this. I am in Florida.

[sh9730]

Also, did you have to have a hearing because when you signed the agreement you indicated you were NOT represented by counsel? I just signed a reaff and my attorney filed it (didnt ask for money so I guess that was included in my fee) and my understanding is it is filed and the judge will either approve or deny. No mention of a hearing at all? Since I am represented by counsel I did not even have to provide financial information in the agreement, it only asked for that if I was not represented or if the lender was a credit union, which mine was not?

Guess Im asking should I be expecting a notice of hearing? The reaff agreement has been filed by my attorney.

[keepsmiling]

This NJ person thanks you for posting. I have been trying to decide what we will do as well, when we finally get around to it. Still making payments on an 04. Don't ask lol.

[Pappas]

I will do my best to answer all of your questions, but remember I am not an expert or authority, just some guy who went through it.

The rules concerning a hearing for reafirmation are that if you DO have an attorney, the attorney has the oportunity to sign off on your reafirmation. Meaning, the lawyer is telling the court that he has reviewed your information and you should get approved because tyhe lawyer does not think that reafirming your car loan will be a great burden on you or your finances. If they do sign off, there is no hearing, you just get approved.

The problem with this is that lawyers do not ever sign off, because they do not want the liability if you default and then decide to sue them. Since they are not signing off, you must go before a judge and plead your case for reafirmation. That way a judge, who you can not sue, makes the ruling, not your lawyer, who you could sue.

My reafirmation hearing was not covered in the money i paid my attorney, so my choice was to either pay him more to attend, or do it myself. If your deal with your attorney includes this, then he will come to court and represent you at your hearing. My wife and i saw no reason to spend a couple hunderd dollar more for a 5 minute hearing we could do ourselves. So my pettion for reafirmation was filled by the lawyer, but we represented ourselves at the hearing.

If you are filling pro se, without an attorney, then you have to go to a reafirmation hearing no matter what.

The fact that some of you have not heard anything after filing your reafirmation may be because (A)your attorney signed off and you do not need a hearing, (B) you just havent gotten your hearing notice, or (C) your attorney never filled anything and is lazy. I suggest that all of you call and ask your attorney the status of the reafirmation.

As far as the lenders being able to take your car even if you pay: Let me be clear. If you do not reafirm, or even try to reafirm and get denied, basicly you just do nothing and keep paying the loan, your lender can come and take the car even if you are paying. Some lenders do not care and let you pay and keep the car, with no reafirmation. Some lenders (ford, toyota, etc.) come and get it regardless if you pay or not.

By getting the reafirmation approved, or trying to get it approved and being denied by the judge, the lender can no longer come and reposses the car, as long as you keep paying. They can only reposes if you do not even TRY to get reafirmed. If you TRY to reafirm and get denied, thats not your fault, and the court says that the lender can not come get it if you keep paying. Stop paying in any situation and the tow truck is on its way.

So, reafirm approved = no repo as long as you pay. reafirm denied = no repo as long as you pay. do not even try to reafirm = lender can come and repo regardless if you are current or not if they feel like it.

[Pappas]

Again, I am just some guy. I am not a lawyer, and could be 100% wrong. So do not take my personal advice as absolute fact. You guys paid for attorneys, so you should use them.

I would never intentionaly mislead anyone, but I am not even close to being an expert.

[sh9730]

Thanks Pappas. Yes, I ve checked on Pacer and the reaff has been filed. I guess I could look there and see if he signed, but then I would have to pay .08 for each page to look at the thing and its a few pages long.....so I sent an email to my attorney to see if he signed. The way you explained it is exactly the way I thought it worked, except I had forgotten that if the atty doesnt sign there will be a hearing. SO, Im hoping he didnt mention anything to me about a hearing because he signed..but I have an email into him checking.

I hope no hearing. My courthouse is over an hour away and to take that much time off work for a simple hearing would suck.

Thanks again.

P S - I guess Im not sure whether IF there is a hearing my attorney would go or not.....I just know he didnt charge me to file it.

[Pappas]

My hearing was an hour away also, but it was on one of my days off and the train goes right to it, so no parking issues.

I knew my lawyer wouldn't sign it, so I didnt even bother asking him to. He just filled it for me, which was included in my bk attorney's fee, but for him to appear would have been another $300. We figured if we go and get approved great, we keep the car. If we go and screw it up and get denied, great we keep the car. There was no down side to do it ourselves, and the judge was very accomodating.

I was not going to spend $300 for him to stand next to me while I answered questions. Now my case was very simple. Other people might have more difficult issues that need an attorney's help.

I am a firm believer in hiring a professional when things get complicated, but i also believe in saving my money when I can do something myself. So please dont go out and fire your lawyers all at once. Your situation may need them.

[sh9730]

Well, I got too anxious so I went ahead and spent the .88 cents to look at the document on PACER (I ve only spent 3.00 so far in my entire process!) since I hadnt heard back from my attorney (its only been a few hours so wasnt really expecting it yet), and it was driving me crazy! My attorney did sign the agreement and indicated no undue hardship. He used my numbers from schedule I and J as indicated on the form, but then he sort of messed up by using a total of my expenses that included my mortgage and a second vehicle, neither of which will be reaffirmed (and it says right on the form expenses including all REAFFIRMED debts), but I still had enough income to not be presumed hardship so I guess he felt comfortable signing.

SO, I guess there is no requirement the judge approve, and here in AZ the BK judges are loathe to reaffirm anything....but at least I wont have to go to a hearing, and my lender ALLY has already indicated as long as "all reasonable efforts" to reaffirm have been taken, they will stay and pay.

Thanks again!

[debee]

Just so im sure i understand, this means you continue to make payments but at any time the lender could be a jerk and repossess? Is the lack of an ability to do a stay like in a home situation state specific? I am reaffirming multiple vehicles and the attorney has said nothing about this. I am in Florida.

Depends on your lender. If your lender agrees to allow a retain & pay, then you don't have to reaffirm.

If your lender does not allow "ride thru" then you choose one of three allowed intentions (reaffirm, redeem, or surrender) and perform accordingly. Some circuits have ruled that the three choice option only applies to personal property. One (the 11th) circuit has ruled that the three choice option applies to real property as well.

There have been rulings in courts in the 3rd, 4th, 9th and 10th that so long as the debtor timely files a Statement of Intentions and tries to perform accordingly, then they have done their bit and the lender cannot repo if the court denies the reaffirmation. There have been rulings in the 3rd, 9th and 10th that have said lender can repo (if reaffirmation denied) but only if state law allows for it in the particular circumstance.

There have also been rulings where reaffirmations were denied and the court didn't explicitly state that the lender could not repo which means that they were free to do it. The cases that I recall reading involved luxury brands, or expensive cars purchased when debtor's trade-in was still new and presumably reliable.

Before the changes in the bankruptcy code in 2005, the country was split on this issue. The 2nd, 3rd, 4th, 9th and 10th circuits allowed ride-through/retain-and-pay and still do in most cases, so long as the debtor has done their bit (unless the lender doesn't require it, then it's not necessary anywhere in the country).

The 1st, 5th, 6th, 7th and 11th circuits did not allow ride-through. Courts in these circuits have not been ruling that a denied reaffirmation = no repo. The 8th circuit was split and seems to be split still.

ETA: @Pappas - Great post/thread.

[jetsfan2010]

very good info

[catleg]

Just FYI, you are allowed to download your own case filings on Pacer once per filing, for free. And if your billable usage per quarter is less than $10, there is no charge.

[tripbuddy]

As far as the lenders being able to take your car even if you pay: Let me be clear. If you do not reafirm, or even try to reafirm and get denied, basicly you just do nothing and keep paying the loan, your lender can come and take the car even if you are paying. Some lenders do not care and let you pay and keep the car, with no reafirmation. Some lenders (ford, toyota, etc.) come and get it regardless if you pay or not.

By getting the reafirmation approved, or trying to get it approved and being denied by the judge, the lender can no longer come and reposses the car, as long as you keep paying. They can only reposes if you do not even TRY to get reafirmed. If you TRY to reafirm and get denied, thats not your fault, and the court says that the lender can not come get it if you keep paying. Stop paying in any situation and the tow truck is on its way.

So, reafirm approved = no repo as long as you pay. reafirm denied = no repo as long as you pay. do not even try to reafirm = lender can come and repo regardless if you are current or not if they feel like it.

Wait!!! Is Toyota known for repossessing even if you keep paying? My attorney suggested it as a good company to finance with, since she's never heard of them repossessing an up-to-date ride-through. ANYONE!?

[Pappas]

I have spoken to 2 different people who said that Toyota told them they would not alow them to stay and pay without a reafirmation. I have no direct knowledge of this, as I do not deal with toyota, just what i was told. I also do not know alot about the situation the two people were in respectively. So they could have been mistaken.

My personal opinion is that if you wish to keep and continue to pay for a vehicle, stay and pay without a reafirm or a reafirm denial by a judge, is risky. By doing nothing to close off the posibility of reposesion, you could make 10 more payments and they can still show up and take the car. Even if the lender tells you a reafirm is not neccesary and you can stay and pay, what stops them from changing their minds, or selling the company to another lender that does not alow it?

In my opinion, your best bet is to get an approved or denied reafirm, not just stay and pay without protection from the courts.

If people out there are worried about reafirming for the fact that they may become financialy unable to pay down the line, and do not want to be responsible for the debt, but still want to try and keep the car, just file the reafirmation, and go to court. When the judge asks if you want to reafirm tell them yes because you need the car for work. When they ask you if you can afford the payments, tell the judge NO and that you might be loosing your job tommorow. The judge will mark the reafirm as denied, and you will be able to keep making payments without the hassle of being responsible for the loan should something go wrong.

The only reason we actualy wanted an approved reafirm and not a denial, is because either way we would have paid the car off, but with an approved reafirm the lender promised to keep reporting the debt as current and paid to all three credit bureaus. This way we get a little jump start on rebuilding our credit.