What exactly is "re-affirming"?

[Intoodeep80]

I will be surrendering my SUV, house, and boat in my chapter 7 bankruptcy, that I will be filing in December.

I hear a lot about people "re-affirming" their house or vehicle.

Does this mean that after my Bk is up, I can "buy back" my surrendered vehicle from the bank? Is that even possible?

[debtmonster]

I will be surrendering my SUV, house, and boat in my chapter 7 bankruptcy, that I will be filing in December.

I hear a lot about people "re-affirming" their house or vehicle.

Does this mean that after my Bk is up, I can "buy back" my surrendered vehicle from the bank? Is that even possible?

It means you will not repo it and you will continue to make payments on it. As long as you are not upside down, the item could be worth keeping.

In many cases, most of our stuff is worth much less than it's worth and is not worth re-affirming.

[AngelinaCatHub]

Not at all. If you “pay through” that means, you wish to keep the item and you must stay current. This does not mean the Creditor will approve it. It is good in this way, they want your money, not your car. After bk if you cannot pay, you can surrender it in bk.

Reaffirmation is another subject. When you reaffirm, you promise to pay under any circumstance, and if you do not you can be sued or levied on even though you are bk.

If you definitely want this item, car or house, and can pay for it, you can reaffirm. It does have some positives as you will have no problem from that Creditor. But, remember if you do not fulfill, you will be sued and no bk will protect you.

I hope I'm clear on this for you. ‘Hub

[StartingOver08]

This link gives you a very good idea of what a reaffirmation agreement is:
http://www.************************/...ion-agreement/

"A reaffirmation agreement is an agreement where a debtor chooses to become legally obligated again to pay all or portion of a debt which would be discharged in the bankruptcy case. A reaffirmation agreement must be filed within 60 days after the meeting of creditors date. Reaffirmation agreements are voluntary. They are not required by the Bankruptcy Code or other state or federal law. After bankruptcy, a debtor can voluntarily repay any debt rather than sign a reaffirmation agreement, but since October 2005, there may be valid reasons for signing a reaffirmation agreement (at least in regard to vehicles). " (for more see the link above)


This link gives a concise history of why the reaffirmation agreement was put into place in the new BK law:

http://www.doanlaw.com/blog/?p=11

Long and the short of it: the auto finance companies don't have to write down the entire balance for a vehicle in BK when you have signed a reaffirmation agreement - its like the BK does not exist. (read above link for detail).

An interesting question is this: Why don't more debtors negotiate the terms of the reaffirmation agreement?

I am in the process of negotiating two reaffirmation agreements. One is almost finished (and it is looking good and is with a CU no less). The other is with another lender we are just beginning to discuss negotiations. The lender has played every trick in the book; including, increasing the balance owed, changing the interest rate, and changing the type of loan from an closed-in installment to an open end credit agreement!!!

[debtmonster]

I am in the process of negotiating two reaffirmation agreements. One is almost finished (and it is looking good and is with a CU no less). The other is with another lender we are just beginning to discuss negotiations. The lender has played every trick in the book; including, increasing the balance owed, changing the interest rate, and changing the type of loan from an closed-in installment to an open end credit agreement!!!

I would LOVE to see this once you're finished. I am up in the air about re-affirming my Saturn. We will need a car and now I see how difficult it will be to replace this vehicle within a couple weeks of a bankruptcy discharge. From the stuff I've seen, a $12000-14000 car will cost nearly $450-500/mo. for 36 months. That's NUTS! I am paying almost $300/mo. now with 5.9%. The problem is that the car is so upside down in value. We owe $13k and it's only worth $4-5k at auction.

[Bandit]

YOu dont go buy it back after you surrender it...well, you could buy it back but it would not be called reaffirming. That would be called buying it again.

One would reaffirm before the BK is over & closed.

The idea is to keep paying someone back where it would be in your best interest though if it can be discharged it is better to discharge it because you enter another legal binding in reaffirmations.

If you have a vehicle that you want to keep then you have to be current and then you can reaffirm it if the bank & court deals with you that way. It is like you want to keep one thing, say the SUV, then you reaffirm that (or a ) payment instead of liquidatiing the SUV unless it goes above & beyond your exemption for a vehicle or other reasons...or say it would cause hardship on you or your children to make the payment.

IMO and as a general rule, the negative possible consequences often outweigh the benefits.

Reaffirming a Debt in Chapter 7 Bankruptcy
By Bankruptcy Attorney on Feb 4, 2007 in General Bankruptcy Information

Reaffirming a debt means that you sign and file with the bankruptcy court a legally enforceable document, which states that you promise to repay all or a portion of the debt that may otherwise have been discharged in your bankruptcy case.
Reaffirmation agreements must generally be filed with the court within 60 days after the first meeting of the creditors, which is also known as the 341 Meeting.

The above & the rest of it is explained very well here:
http://www.************************/...-7-bankruptcy/

Hope that helps a little

[Bandit]

This link gives you a very good idea of what a reaffirmation agreement is:
http://www.************************/...ion-agreement/

We put the same link.

[StartingOver08]

I would LOVE to see this once you're finished. ... .

Debtmonster, on the deal that is almost done, I was able to reduce the principal balance, reduce the interest rate to 5%, skip a month, extend the payoff two more months, remove cross-collateralization (because this is a CU) and reduce the payments nearly $100/month from what I had been paying.

The other lender is playing dirty pool...so if I can't get what I am looking for I will not reaffirm and surrender the car. Just what they need - another high milage used car!

[debtmonster]

Debtmonster, on the deal that is almost done, I was able to reduce the principal balance, reduce the interest rate to 5%, skip a month, extend the payoff two more months, remove cross-collateralization (because this is a CU) and reduce the payments nearly $100/month from what I had been paying.

The other lender is playing dirty pool...so if I can't get what I am looking for I will not reaffirm and surrender the car. Just what they need - another high milage used car!

My car is financed with GMAC. I've had it about 24 months. Do you think they will not negotiate and simply want the car back with me going BK or do you think I could get them to lower the payoff from $13k to say something like $6k or $7k?

Another reason why I'd like to get rid of it and because we are uncertain to GM's future. Who's going to be around to have replacement parts for it if they decide to go bankrupt in 2 or 3 years? Or if they close the Saturn division down altogether like they did with Oldsmobile.

[StartingOver08]

Well, it certainly is worth a try. Why would they want your car back? It is far better for them to write down part of the loan than the entire loan.

However, the lenders do not always do what makes sense. You need to handle the negotiation yourself. The attorney is good for legal ramifications, but I find in general they do not "do math". Only you know your situation and what you can pay and what the vehicle is worth to you. You have the ultimate leverage - surrender the car rather than sign a reaffirmation agreement. Remember, they need you to sign it in order to not write down the entire balance.

[debtmonster]

I tried to negotiate with Wells Fargo before they repo'd my car and they wouldn't do a thing because I did not have the loan long enough. Don't I need to have the car for at least 36 months before they will budge? As of now the car has the most depreciation.

[StartingOver08]

Well, in my experience with the one negotiation that is nearly finished - all those terms were worked out verbally, then the CU sent the contract to my attorney and the contract reflected exactly what we discussed - and I have had the car two years next month.

[debtmonster]

What exactly were those terms so all of us can get an idea of what the possibilities are?

It would be nice to see an before and after scenario.

[TEW]

[debtmonster]

If you don't sign a re-affirmation agreement during the BK, will they take the vehicle or can they still let you have it?

Can you theoretically file BK, keep the vehicle and make payments for 6-12 months and then give it back and buy a new one and not have them come after you because you filed BK protection on that vehicle?