reaffirmation of car note

[anafan]

I am contemplating filing Chap 7 BK as a no asset case.

I have a car note that I will want to affirm (14 months more to pay off car) with US Bank. I also have a cc with US Bank, not linked in any way, owe 6k on it, opened over a year ago, with 8k on it. so far I have paid 2k towards the US bank cc.

will US bank let me reafirm the car note, in spite of the fact that they are going to eat 6,000 on the credit card? I have not missed a payment on either. I am current on my car note.

the US bank cc was a balance transfer of some high interest cards. offered at 0% for 12 months. now the interest rate is jacked up and the minimum went up from $70 to $120 a month. I have kept it current....lots of juggling!

I could transfer the cc balance to another credit card, and wait to file 6 more months if I have to. but I was hoping to file sooner than later, and I don't want to raise any red flags with a large balance transfer being done. even though I owe more on the car than it is worth, I want to keep the car since I have kept it up well. I don't want to have to buy a question-mark car out of bankruptcy. I also wanted to reafirm the car note so I could be working on rebuilding my credit while paying the remainder of my car note.

other than charging a few essentials a month ago, I have ceased using all of my credit cards and am still paying on them...the minimums, but still paying!

the last balance transfer check I wrote was for $2500, in January 2010, not on the US Bank account. I bought some things that my ex broke on his exit out of my life. also bought a bedroom set since he was too cheap to ever buy anything nice for the home. (divorce final in March) so I'm cleaning up my life...ex and ex's debt. (yes, I got stuck with the debt, longer story...doesn't matter)

thank you!

(Ohio resident, if that makes any difference)

[AngelinaCat]

Hi anafan:

Welcome to the forum. Are you able to stay current on the car loan, whether you reaffirm or not? If so, the general advice is to just keep paying the loan as scheduled and go about your life, and do NOT reaffirm. That way, if something happens down the line, you can walk away from the car and the note, and not be responsible for the difference you will owe, if the car is picked up and sold at auction. If you reaffirm that loan, and the above scenario happens, then you WILL be responsible for it. If you can stay current, you should not have a problem.

Now with all of that said, some institutions will not let you do what is called a "ride-through", which is what we talked about in the above paragraph. Some institutions will insist on reaffirmation if you (1) want to keep the car, or (2) if you want to keep doing business with them. In our case, it was both options. We wanted to keep the car, and like you, it was almost paid off. I think we also only owed about another 12-14 months. Plus, my hubby, AngelinaCatHub, whom you will meet by and by, had done business with this Credit Union for more than 40 years, and he wished to stay with them. So we reaffirmed that car loan and an Overdraft Protection Loan, and we were fine.

'Hub had to talk with the BK department of the CU two or three times, but everything eventually worked out fine.

I hope this helps. Good luck to you!

[anafan]

I think you misunderstood my question.

I'm absolutely positive I want to reaffirm my car note. I am current on ALL of my payments, car note, and credit cards, it's a juggling act every month, but I am doing it.

I want to reafirm my car note. I know I can pay it consistantly, once I have no credit card debt. I want to keep my car. and I also know that if I reaffirm my car note, then the payments will be reported to the credit bureaus and I can rebuild my credit faster.

my question is, if I have a credit card with US bank, with a 6000.00 balance, that will be discharged in BK....will US Bank then let me reaffirm my car note with them, keep in mind that they are 2 separate accounts....I just want to know if anyone has had experience with this situation. a credit card being discharged and a car note with the same bank, being reaffirmed.

because if US Bank will perchance get snippy because they are eating 6k on my credit card debt....I can transfer that balance to another credit card, and I can wait to file BK for 6 months or so.

that is my question.

I know I can continue to make payments on the car on my own. but I want to reaffirm the car note so those payments will be reported to the credit bureau. I love my car and I want to keep it. I have maintained it well. I don't want to buy another car and get into a whole new car note with high interest rate after my BK is over!

I hope I made myself clearer this time.

thanks again for your help!

Hi anafan:

Welcome to the forum. Are you able to stay current on the car loan, whether you reaffirm or not? If so, the general advice is to just keep paying the loan as scheduled and go about your life, and do NOT reaffirm. That way, if something happens down the line, you can walk away from the car and the note, and not be responsible for the difference you will owe, if the car is picked up and sold at auction. If you reaffirm that loan, and the above scenario happens, then you WILL be responsible for it. If you can stay current, you should not have a problem.

Now with all of that said, some institutions will not let you do what is called a "ride-through", which is what we talked about in the above paragraph. Some institutions will insist on reaffirmation if you (1) want to keep the car, or (2) if you want to keep doing business with them. In our case, it was both options. We wanted to keep the car, and like you, it was almost paid off. I think we also only owed about another 12-14 months. Plus, my hubby, AngelinaCatHub, whom you will meet by and by, had done business with this Credit Union for more than 40 years, and he wished to stay with them. So we reaffirmed that car loan and an Overdraft Protection Loan, and we were fine.

'Hub had to talk with the BK department of the CU two or three times, but everything eventually worked out fine.

I hope this helps. Good luck to you!

[tcreegan]

Hi anafan,

The cc acct and car loan at the same bank question is something called 'cross-collateral' This is where they can offset one acct for a default on the other. This is common among credit unions; I am under the impression it is not common at banks, at least I haven't seen anyone post about it. It is buried in the fine print of your loan or cc agreement, but I would go for the simpler approach and ask them directly. Of course I would go to a branch where they din't know me and ask as if I was a new customer, but thats just me...

I want to keep my car. and I also know that if I reaffirm my car note, then the payments will be reported to the credit bureaus and I can rebuild my credit faster.

You can probably do both without a reaffirmation. US Bank will stop reporting once the BK is filed for fear of violating the automatic stay, but after your case closes you can ask them to start reporting again. (You usually need to ask them even if you have a reaffirmation) They just need your permission to report, not a reaffirmation. If you stay current and keep insurance, they have no reason to come for the car.

You mentioned a couple times about being current on your debt, I hope you aren't doing this just for a credit score....it doesn't help much.
If you know you are going to file BK, you can stop paying on your debt and use the $$ to jumpstart your post-BK "fresh start"

Good luck with your filing!

Tom in Colo

[anafan]

thanks for the reply.

I didn't open either account at the actual bank. I financed the car thru the dealership and turned out US Bank was the lender. and later I got an offer in the mail for a US Bank credit card with a 0% for 12 month offer. now the interest has just kicked in and they raised the minimum.

I have a great credit score, but I am living check to check paying all the minimums on my credit cards.

if I understand you correctly, if I go bankrupt and I don't transfer the US credit card account to another card, should US Bank not allow me to reaffirm the car note, I can still pay off the car and keep it?

the most important thing for me is to get a clean slate and I get to keep my car. it's only worth 6k now, but I owe over 7k on it. I am underwater a bit in the note, so equity isn't a problem.

the whole plan is to get out of this mess my ex left me in and change my life. I can't do it carrying around 20 years of our debt, that I will have to pay for 30 years to pay off. I know if I go bankrupt now and bring my credit score up to the 700's that I can qualify for a HUD loan in a couple years. I am never getting in this boat again! I have learned many lessons!!

so that's why I am doing this now. I can just barely pay all of my bills. but I can't do anything, every emergency has to be put on a charge card and I want out from under this debt.

last year I used my credit cards to get a cash advance, first to pay for the divorce and another to replace stuff he broke and stole from the home, and to get back on track. it's been at least 6 months since any of those transactions. I've paid quite a bit of it off anyway.

thanks for your help.

[anafan]

oh, and I'm still paying because I used my credit card 6 months ago for a balance transfer check. I was planning on paying until next April and then going to see an attorney.

I'm trying to put time and payments on that transfer. I am afraid of an adversarial proceeding.

[anafan]

I called US Bank and acted like I was applying for a used car loan. I asked them if they do cross collateral and they said no. each account is separate! yahoo! so I don't have to transfer that balance. he wanted to preapprove me for a car note right there. I said I was just shopping terms and had been a credit union and I didn't like their terms.

so I'm in the clear right? I can default on the credit card and either reaffirm my car note, or just continue to pay if off?

I am such a worry wort!

thanks for your help tcreegan!

[IBroke]

oh, and I'm still paying because I used my credit card 6 months ago for a balance transfer check. I was planning on paying until next April and then going to see an attorney.

I'm trying to put time and payments on that transfer. I am afraid of an adversarial proceeding.

Just be sure not to pay more than $600 over the period of 90 days prior to filing on any of your unsecured debts.

[tcreegan]

Hi anafan,

I didn't think US Bank would use cross-collateral, not common at large banks, usually the right hand doesn't know what the left hand is doing....

Just keep current on the car payment and keep the insurance on it, odds are US Bank will do....nothing.

If memory serves me (but don't count on it) US Bank is not very repo happy and not very BK adverse. But do a search on the forum and see what other folks have posted.

Good move putting time between the cc transfer and the filing!

Tom in Colo