We are told to not reaffirm our somewhat new vehicles

[moneytree]

Our atty. strongly suggests we do not reaffirm. We are making the payments. I at first was worried that they could change our financing, but was told they cannot touch that. We have 0% financing on one of the cars and I believe 6.5% on the other. The cars are just a couple of years old.

Has anyone else not reaffirmed? Or why did you choose to reaffirm?

And from my understanding, when choosing to reaffirm, it can hold up the discharge? Just curious.

[HHM]

Myth 1, reaffirmation does not hold up discharge.

I think you should ask your attorney "why not reaffirm", what benefit is there to you of not reaffirming. Because, strictly speaking, there isn't any, except for the fact that if you default in the future, you are not liable for any deficiency balance that may be owed if the vehicle is worth less than is owed.

Also, whether to reaffirm or not, depends on the creditor and your BK district. The letter of the law seems to be that you either reaffirm, redeem or surrender. If you do nothing, the creditor has a right to enforce their lien (i.e. repo).

I'd ask you attorney more questions about this.

[moneytree]

hard to talk to atty...

It's hard to talk to our atty. This guy is in his late 70's? (I've never met him) and he's been representing us only because our previous atty was fired from the law firm. We were handed over to him. Mistakes, hold ups, no reply phone calls until weeks later (and last minute) and several conversations about reaffirming and we are still left in the dark.

Our atty. questions why we would to reaffirm, and not knowing much about it or what our lenders could do, we have just listened to him tell us over and over that it's not necessary (for the reason you mentioned). I asked him about our interest rate being changed and his reply was a bit irritated like--why would I think that. I think he actually told me that a lot of info on the internet is wrong. LOL That would mean he's pointing fingers at you guys. Too funny. I let it go in one ear and out the other.

But if you are saying that if we do nothing they can just repo the car, then that is making me worried. Atty. did tell me that they could take the cars either way if pymts aren't made. Jeesh--should we start keeping them in the garage? Should we be paranoid until they are paid off in 2/09 and 10/10? Not planning on it and not planning on ever missing a payment. How late does one have to be though for them to repo? Are you saying they could repo for no reason? Thanks.

[BK'd-Betty]

Technically, yes, they "could" wait till you have one payment left and repo the car. Without reaffirmation - they can take it any time they please.

Locking in the garage won't help - they can (and will) follow you to work or a shopping mall or whatever and just take it.

More than likely, it won't happen - they want your money, not your car. So this would be an extreme scenario - however, I have read (over on the credit boards) about cars being repo'd when the debtor fails to reaffirm, even when they are current.

[lrprn]

But if you are saying that if we do nothing they can just repo the car, then that is making me worried. Atty. did tell me that they could take the cars either way if pymts aren't made. Jeesh--should we start keeping them in the garage? Should we be paranoid until they are paid off in 2/09 and 10/10? Not planning on it and not planning on ever missing a payment. How late does one have to be though for them to repo? Are you saying they could repo for no reason? Thanks.

This is one of those areas of the bk law that changed when the new law went into effect in Oct 05. If you do a straight read of the new law, it clearly states that the only choice filers have now is to reaffirm, redeem, or surrender. HOWEVER (and it's a big however!) what filers are finding in reality in many locations is that *if* the value of the car is not over what is still owed, and *if* they choose not to reaffirm, most car lenders have found it's best to leave well enough alone as long as the filer is making their car payments on time every month. The lender makes their money without the risk and costs of repossession and resale which may go upside down and lose them money.

Our lawyer advised us not to reaffirm our cars when we filed Ch 13 and we did not. He had dealt with our lender several times since the law changed and said they told him during court hearings that they would far rather we keep making the payments rather than repossess our cars (one is worth what we owe on the loan and the other is upside down about $4K). It's six and a half months later, our 4- and 6-year-old cars are being paid inside our plan by the trustee, and we're still driving them every day. For us we decided it was worth the risk (and there is a risk) of repossession. Only you can decide if the risk is worth it in your case.

[moneytree]

confused...

If that is the case, and since our cars are new (and we've paid a heck of a lot on them) then it sounds like we should reaffirm!! Frustrated that atty is so vague about it. Maybe it's only good not to reaffirm if someone has a clunker of a car?!

ugh!

If we do this, are you sure it will not change our discharge date?

Does one or the other report differently on the cr. bureau's?

[BK'd-Betty]

It will not change your discharge date!

As far as reporting - yes - it will make a difference. Without reaffirmation the car loans will likely report 0 balance, and included in bankruptcy. The Lender will not report your payment history after your filing date.

If you reaffirm, they will - but make sure your reaffirmation agreement stipulates that they will continue reporting your positive payment history. (most will, but they are not obligated to, so the stipulation in your reaffirmation is important)

Having the car loans report positive payment history after your BK will go a long way in rebuilding your credit after discharge.

[HHM]

In reality, most car finance companies are not going to repo the vehicle because you did not reaffirm (it's doubtful even many of these companies are any more familar with the new BK provisions than most people). So, although its a risk to not reaffirm, it is a small one. All they want is that you continue the payments.

As for credit reporting, I am not as certain as I used to be about how an auto loan should be reported if reaffirmed...personally, I agree with BK-Betty, if you reaffirm, they should report it normally, but many don't. So, if you reaffirm, you need to make sure the Reaffirmation Agreement stipulates to continued, accurate reporting of the account on your credit report and any co-borrower or co-signers credit report.

It sounds like your attorney is old school and feeding you the typical, old law, reaffirmation line. Under the old law, it almost never made sense to reaffirm unless you negotiated a better deal.

[moneytree]

And to make it more confusing...

Our GMAC car loan is showing 'included in bankruptcy' balance ZERO (hardly the case) and our Honda loan thru Chase Bank is showing accurately with the balance & no mention of a ch.7. What do we do about this?

My husband remembers signing off on 'wanting to reaffirm' both cars. But our
'new' (old law guy) atty said that they didn't have any info on that. I pulled the whole ch.7 '40 pg'. stack of paperwork from the PACER site 1 mo. ago and saw the page where my husband signed to reaffirm. We went from one law firm to one older atty, not by choice. I guess it's possible that the form was tossed out because of one conversation prior to the 341 when our new atty. advised not to reaffirm. IT'S FRUSTRATING THAT HE NEVER MENTIONED HOW THEY DO NOT REPORT. WE WANT TO REPAIR OUR CREDIT WITH VIABLE SOURCES AND NOW WIPE OUT OUR HISTORY WITH THESE CAR LENDERS!!! IT BOTHERS ME TO SEE 'INCLUDED IN BK' WHEN WE ARE PAYING ON SOMETHING!!! (not shouting at you--but our atty) There...I feel better.

So other than calling the atty up and telling him we need to reaffirm, why is it reporting differently on his credit report?

[HHM]

Just for clarification, the "Statement of Intention" that is part of your BK packet, where you indicate what you "intend" to do with secured debt, i.e. reaffirm, surrender, etc, is NOT a reaffirmation agreement.

A reaffirmation agreement is a separate document that gets signed by both you and the creditor in question.