Why Reaffirm ?

[HHM]

The problem with this particular subject is the fact that there is a level of uncertainty in the law...this subject generates two types of advice, legal advice and practical advice.

The legal advice is...you run the risk of a repo for failing to reaffirm becuase the letter of the BK law "requires" reaffirmation, redeemption or surrender. Thus, it is not clear the debtor has any leg to stand on to prevent a repo if the reason for the repo is failure to reaffim. Thus, you are at least taking some risk of losing your car, even if you are current on payments, if you fail to reaffirm.

The practical advice is...almost without exception, if a debtor is current on her payments when she files BK and continues to make her payments on time and in the full amount, her car has NOT been repo'd for failure to reaffirm.

A good attorney will give you both practical and legal advice, but will stress the legal side of it.

[no_it_all]

My lawyer refused to sign my reaffirm last week too due to negative $250. Only if we got a second income putting us well above the negatives would he sign. That could mean the dreaded 13 though, so no thanks....

I don't follow this. If you go to Walmart and get a part-time job to eliminate this negative balance, you will then be able to expense this car on the Means Test Calculation worksheet. Those transportation expenses should offset the increased income, leaving you pretty much back where you are now, except you will have your car.

I also assume you have been following this thread, and as posted, why don't you just <not> reaffirm, and keep the car? Make payments <on time> and ride off into the sunset....Believe me, nobody is going to repo it if you are current in your payments..

Now, if it were me, I would hand the car over in a heartbeat and get out from under the debt.

[no_it_all]

I always thought the means test was a snapshot of our finances the day we filed, but it seems that some Trustees are bending that vagueness to their benefit.

The means test is a reflection of your last six months finances, not a snapshot of them the day you file. In addition, the trustee, by law, has a fiduciary duty to make decisions based on significant changes in future income or expenses.

[no_it_all]

My lawyer has told me that there indeed HAS been cars repoed after non reaffirmation, but mostly Ford.

I am sure cars have been repo'd after non-reaffirmation, but only when the debtor was <not> current with payments. Attorneys have been know to s-t-r-e-a-t-c-h the truth when trying to make a point..Obviously, there is absolutely <no> logical reason for Ford Credit or anyone else to repo a car that the debtor is current on.

In a public bankruptcy forum (like all forums) individuals <hear> all kinds of things and often those <things> are urban legends or as in this case, not all the facts are illuminated. About a year ago a poster was ranting and raving about this very subject (repo'd because non-reaffirmation while current in payments) and it turns out (for those that stuck with the thread, like me) that yes, she was sending in payments BUT TO THE WRONG CREDITOR. That last little bit of info was missing until the end of the thread, which as you can imagine, was significant.

[Beach Bum]

My lawyer has told me that there indeed HAS been cars repoed after non reaffirmation, but mostly Ford.
My lawyer refused to sign my reaffirm last week too due to negative $250. Only if we got a second income putting us well above the negatives would he sign. That could mean the dreaded 13 though, so no thanks....
Its terribly scary though, to pay while they can take it can take it any day. Like said, will we get ownership papers when payoff happens? Has anyone here?
My husband and I are going to try to look at it from a "We are renting and hopefully will own" point of view.
(If they came for this car we have car I think they would shreak anyhow. Its pretty trashed from two kids, a large dog and delivering newspapers before in wee hours while spilling coffee....)
WAM

I'm in the same conundrum. If we amend to show that we make an additional $300 a month our lawyer will sign the reaffirmation. But it's unclear if that will push us into a Ch. 13. I really don't know what to do because no one seems to have a clear cut answer to this question.

I always thought the means test was a snapshot of our finances the day we filed, but it seems that some Trustees are bending that vagueness to their benefit.

[whatamess]

My lawyer has told me that there indeed HAS been cars repoed after non reaffirmation, but mostly Ford.
My lawyer refused to sign my reaffirm last week too due to negative $250. Only if we got a second income putting us well above the negatives would he sign. That could mean the dreaded 13 though, so no thanks....
Its terribly scary though, to pay while they can take it can take it any day. Like said, will we get ownership papers when payoff happens? Has anyone here?
My husband and I are going to try to look at it from a "We are renting and hopefully will own" point of view.
(If they came for this car we have car I think they would shreak anyhow. Its pretty trashed from two kids, a large dog and delivering newspapers before in wee hours while spilling coffee....)
WAM

[HHM]

The question of whether to reaffirm or not really depends on your individual circumstances. Under the old law, it was a no brainer, you never reaffirm, and that same advice pretty much holds true under the new law. (but I think most attorneys simple default to that advice because it is the advice they are used to giving and gets them out of explaining that they would have to sign off on the reaffirmation and probably don't want to).

The legal implication of reaffirming is this...if you reaffirm, and later default on the car (or as Marz points out, something happens to the car but you are not covered by insurance), you will be liable for a deficiency balance (the difference between what you owe and the then current market value of the car). If you do not reaffirm, if you later default, etc, you are not liable for any deficiency balance. Thus, it is rarely in a persons best interest to reaffirm...and since car finance companies would lose too much money by forcing a debtor to accept reaffirmation or surrender, no creditor has tested the law.

[marzipan13]

I once had a lawyer tell me to not reaffirm because after BK something might happen (the car vandalized, stolen, etc) that isn't covered under my car insurance and the car is undrivable... but you'll still be responsible for the debt owed on the vehicle.

[6ftladycop]

Does this information you have apply to Leased Vehicles too?

I see so much about keeping the car after BK that sometimes I wonder if leased vehicles come under this catagory?

[HHM]

Huh?

The current bankruptcy law is written in such a way that the debtor is "required" to either reaffirm, redeem, or surrender an asset that is security for a loan. The option for the "ride through" has been "technically" eliminated from the BK Code. However, the act of, and legal standing of the creditor in repossession and foreclosure are controlled by state law. It is at this intersection of state and federal law (BK is a federal law), that is relatively untested...most state's law require a default by the debtor before a repo or foreclosure can proceed. Some states have better defined and more debtor friendly statutes that others. It remains to be seen if failing to reaffirm would be grounds for default and if federal law will trump state law on this issue.

However, as has been the experience of just about everyone on this board and others, so long as you are current on your payments, and remain so, there is very little risk of a repo or foreclosure since the creditor is usually better off to continue to receive payments than retake the property. The big negative for failing to reaffirm is you have no leg to stand on when it comes to the credit reporting of that particular debt.

[no_it_all]

That is no longer true under Bankruptcy law (or, at least it is not entirely clear), but under certain state law, that may still be true.

Huh?

[no_it_all]

In any event, for the most part, you DO NOT have to reaffirm and more likely than not, you will be able to keep the asset so long as you make your regular monthly payment on time.

Since there hasn't been a single case of a creditor <repo'ing> when the account was current and paid in a timely manner..I would agree. My <guess> is that creditors would rather have cash than old cars out back in the parking lot ;)

[HHM]

If you remain current in your payments a creditor cannot repo. Make your payments on time, keep the property, don't make the payments and property will be repo'd. Reaffirming has nothing to do with it. By reaffirming all you do is lose your right to <walk> from the debt if you later default. Which is not a big deal since you just went BK. The <only> negative I see with <not> reaffirming is your stellar payment history will probably <not> be reported to the CRA's. One caveat would be to make sure you are current when you file.

That is no longer true under Bankruptcy law (or, at least it is not entirely clear), but under certain state law, that may still be true.

Although by the letter of the law, the new BK law did away with "ride through" of secured debts, i.e. the idea that so long as you continue to make your payments, you are good to go...creditors have basically accepted ride through's anyway because it is is in their best interests to continue to receive payments.

Here is how I think this issue will ultimately work itself out in the courts...

If a debtor chooses NOT to reaffirm but is still current on their payments, the creditor has 2 options.

1. Repossess the car (the new BK law gives them this right since a debtor must either Reaffirm or Redeem under the letter of the law, thus, if debtor fails to do either, the creditor has the right to repossess the property).

2. Continue to accept payments.
If the creditor continues to accept payments, then once the BK is discharged, the creditor can only repossess (or foreclose) on a future default (i.e. missed payment). I think the courts are going to limit the remedy to repossess if a debtor fails to reaffirm to an open BK proceeding, i.e. they will limit the remedy to only bankruptcy.

In any event, for the most part, you DO NOT have to reaffirm and more likely than not, you will be able to keep the asset so long as you make your regular monthly payment on time.

[no_it_all]

If you remain current in your payments a creditor cannot repo. Make your payments on time, keep the property, don't make the payments and property will be repo'd. Reaffirming has nothing to do with it. By reaffirming all you do is lose your right to <walk> from the debt if you later default. Which is not a big deal since you just went BK. The <only> negative I see with <not> reaffirming is your stellar payment history will probably <not> be reported to the CRA's. One caveat would be to make sure you are current when you file.

[keepmine]

Just because a lawyer signs a reaffirmation agreement, it does not make him liabile for your debt. He signs it because he believes you have the resources to make the payments. The code uses the term undue hardship to describe whether it's approriate to sign a reaffirmation agreement.
The reason many won't sign a reaffirmation is, they don't believe it is in your best interest. Remember, if you reaffirm and your situation goes south, you are on the hook for any deficiency balance should your home be foreclosed or, an auto repoed. If you don't reaffirm, you walk away with no liability.
I didn't reaffirm my mortgage when I filed nearly 2 years ago and no problems. The mortgage compamy cashes the check every month and I get an annual statement {that has the disclaimer not an attempt to collect a debt}.