Another "should I reaffirm?" question

[overhead]

Hi there, I know there's a lot on this issue already here, but I haven't found any hard answers to this dilemma. Which is: I got a new car just a few months before filing, my payments are $313/month, car's worth just slightly less than I owe. Am I better off reaffirming my loan, do the positives outweigh the negatives? From what I understand from reading the forums, if I don't reaffirm, then I can basically keep the car as long as I keep up my payments, and if I decide somewhere down the road that I can't keep up the payments, or don't want the car any more, then I can stop making payments and give up the car with no penalties, right? The only downside is that if I do make timely payments till the car is paid off, it doesn't help my credit one iota. That's the only good reason for reaffirming, correct? Or is there more to it than that? And if I do reaffirm, will the credit union be legally bound to post my good payment status to my credit report? Or will I have to push them to do this? Any experience either way with this situation, and friendly advice, is much appreciated.

Also, as a hypothetical situation, what if I don't get the car reaffirmed, and something happens to it (theft, total collision damage) that the car insurance only pays part of, would that end up being the credit union's problem if I stopped making payments at that point? Seems kind of tricky, legally speaking......

Thanks!

[bkfiler]

i dont know the anwers so ill wait to see what people say, but i bet you would have to keep full coverage on the vehicle or they could take it from you per their original purchase agreement.

good questions.

[StaciMM]

What is best for you is not something anyone else can answer.

As to the 'what if', the lender can't come after you for any balance no matter what (if you don't reaffirm).

If you do reaffirm, ask your insurance company if they provide gap insurance. If they do, its probably only a few dollars, and would save you from owing a balance if you do have a total loss. I totalled a vehicle 01/03, insurance company treated the loss as if the car was in excellent condition (it wasn't, but since they had to take the car apart to get me out, they gave me the benefit of the doubt) and paid the maximum. I was still left with $4000 balance. Worked out to make $150/mo payments on that, but got to a point where I couldn't since I lost alot of time from work as I was recovering.)

[StaciMM]

I think he means if he is upside down on it. I learned a lesson the hard way, full coverage does not necessarily mean that your vehicle will be paid in full if you have a total loss. The insurance will only pay out what it was worth, less your deductible. 2 words: Gap Insurance.

i dont know the anwers so ill wait to see what people say, but i bet you would have to keep full coverage on the vehicle or they could take it from you per their original purchase agreement.

good questions.

[bkfiler]

i think he is asking if his debts are discharged then whos gonna owe the rest on the car if for whatever reason his insurance doesnt pay the rest? would he still owe it?

can they actually repo it if he doesnt re-affirm but still keep making payments?

do they have to allow him to keep it if he wants to and then keeps making payments?

can they change their mind later and take it?

also, does he have to keep insurance on it since hes not responsibel for it, if thats true?

thanks for info on another subject i never understood well

[StaciMM]

I'm pretty sure something in every purchase agreement requires that you keep full coverage on a vehicle. Letting the insurance lapse is grounds for repo, even if your payments aren't behind.

Technically, if there is no reaffirmation in place, the lender COULD come and get it once the stay is lifted. If you're making payments though, that isn't very likely since taking the vehicle back takes time & money, and they would usually not sell it for a whole lot.

If you don't reaffirm, and end up totalling it later at a point where you owe more than its worth, the balance left over after the insurance payment would be a tax writeoff (loss) I'm sure for the creditor, but it isn't a balance that could be charged to anyone. Just like if you surrender it, and they sell it at a loss compared to what you owed on it, there is no one to foot the bill.

[bkfiler]

so, after confirming with his attorney of course, if he doesnt re-affirm it but keeps making payments then even if he totals it then hes not responsible for any loss.

if thats true then why bother with gap insurance?

[StaciMM]

That's why I said to look into Gap Insurance if he DID decide to reaffirm. (I got the impression he was on the fence.)

[overhead]

should i reaffirm?

thanks guys, that all sounds about right to me. As long as I kept the car, I would keep it fully insured, with gap insurance, so that wouldn't be a problem. More importantly to me now is deciding whether or not it's worth it to reaffirm at all. Does anyone know from experience that my reaffirmation and continued on-time payments would make a positive impact on my credit, or would it just go without being reported? That's what I'd really like to know, the benefits of reaffirming......

Thanks again for all of the input, i really appreciate it......

[bkfiler]

i wouldnt reaffirm anything if i didnt have to. your credit history can be improved much greater by a secured credit card imo.

[AAAArt]

I would re-affirm under some conditions. One word of caution though...a lot of Credit Unions do not report tp the CRA's. If you are thinking about re-affirming to help your credit history, make certain that they are reporting and to all 3. Art