Planning to reaffirm car loan - but now employer cut my hours / possible layoff

[trigabyte1]

Hello all,

We filed Chp. 7 pro se about three weeks ago. Our 341 is in a little under two weeks.

Two months prior to BK I refinanced THIS car loan. We took out more than the value of the car. The excess was reserved to cover expenses while my wife was on medical leave. I was not concerned about issues related to abuse as we had every intention of reaffirming the debt. We filed and provided timely notice to lender of our statement of intention.

However, I've just learned from my employer that due to financial difficulties I have two options: take a pay cut of about $500 a month or get laid off. At this juncture, I'm more comfortable with the pay cut as it would still net me more than unemployment. Job prospects for my field are not good in this area.

However, with this change (and the job uncertainty), I don't see how we'll be able to make all our payments - even after BK. Reviewing my statement of monthly income and expenses, I'm now negative $400 a month after this pay cut and the car loan.

All of these matters can be independently verified. As pro se, I know that I'll have to appear before the judge to have the car loan reaffirmed. I'm pretty sure there's no way she's going to allow me to do so with a negative income.

What are my options here? Do you think the lender will begin an adversarial proceeding? I was planning to send them a letter outlining the changes, providing a copy of the letter from my employer regarding the change in income and notifying them of our intention not to reaffirm and surrender the vehicle.

Any other ideas?

Thanks.

[SMinGA]

I'm not sure that it will be significant since this is a secured debt. If you don't pay, they get the car.

[StartingOver08]

At least you know about your hours before your discharge. This gives you time to change your Statement of Intentions to "surrender" before discharge. IMO don't reaffirm the loan if you don't have the income to comfortably make the payment. It is much easier to find a vehicle after discharge then to struggle with the payment.

I don't see the lender going for an AP at all in your situation. Why would they? You have a significant pay cut that just happened (or will happen). How can they contest it? You are safe.

[trigabyte1]

Thanks, StartingOver.

Do you think I should I amend my Schedule I - Current income of debtors to reflect this change? Or just notify the creditor and UST?

[StartingOver08]

In my BK when I changed my mind about a reaffirmation (reaffirmed one vehicle and not the other) my attorney changed my Statement of Intentions to surrender.

I'm glad it was done that way. You never know if the OC will sell the discharged debt in the future and what do you have to support your position you no longer owe it - the petition showing its surrender. JMO based on my own BK.