Need info on reaffirming car loan

[Ann]

Still very new here and have read up quite a bit on chapter 7. I'm in Michigan and would like to keep my 2 cars that I only have a year left to pay on. I read that Michigan law says if you file chapter 7 and want to keep your car you MUST reaffirm the debt. Please, please will someone who has the time explain to me EXACTLY what that means. Does it mean I have to take out another loan with my lender? Can I just keep making payments to them as usual until they are paid with the same interest rate as I do now (only .09%)? Also can this be done with both cars or just one?

[downsized]

No, you don't have to take another loan with the lender. The reaffirmation paper is essentially just signing papers agreeing to the original loan terms.

Yes, you can simply not sign the reaffirmation papers and just continue to pay as usual. The risk in going that route is that the lender can repo the car even if you continue to make payments.

Can you do that for both cars? Depends. Probably..... as long as there are 2 drivers in the household, you'll be able to keep both cars and you can decide if you want sign the reaffirmation or do a ride thru with them.

We chose a ride through with 2 of our loans and so far, so good. With the economy the way it is and my dh being out of work, we were afraid to sign reaffirmation papers. If there comes a time that we can no longer afford the payments, we give the cars back and that's that. If we sign the papers and end up not being able to pay, we're on the hook for loans as if we'd never bankrupted them. For us, it's less risky to hope GMAC and National City don't mind a ride thru than it is for us to sign the reaffirmation agreement.

[Ann]

Thank you so much for clearing this up for me. Man, I have so much to learn! If you make payments as usual than why would they repossess the cars???

[Rick9972]

Thank you so much for clearing this up for me. Man, I have so much to learn! If you make payments as usual than why would they repossess the cars???

Because, just as you are no longer required to make the payments, they are no longer required to let you rent their collateral. It really just boils down to how pity they wish to be. My great fear on a ride thru is that the bank will wait until I have it almost paid for then repo the vehicle.

[downsized]

Because, just as you are no longer required to make the payments, they are no longer required to let you rent their collateral. It really just boils down to how pity they wish to be. My great fear on a ride thru is that the bank will wait until I have it almost paid for then repo the vehicle.

Exactly. And them taking the car back late in the game is in the back of my mind, too. That's why paying it off once dh gets working again is top on the list of things to do. Right now, it's upside down by over $4000 so we're thinking GMAC would rather us keep paying rather than come get the car, sell at an auction, and be out even more than $4000. As for the National City loan....not sure how that will play out for us.