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Ride-Through no longer legal?

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    Ride-Through no longer legal?

    From an article
    "Putting the Brakes on Ride-Through in the Ninth Circuit"

    According to Ford, section 521(a)(2)(c) now subjects the debtor in chapter 7 proceedings to a new requirement under 362(h)(1)(A), which requires every individual chapter 7 debtor not only to file a statement of intentions regarding secured property, but also to indicate the debtor’s intent to either “surrender, redeem, reaffirm, or assume [the] unexpired lease[s]” of property.[18] Failure to indicate such intent as per the specifically enumerated options in 362(h)(1)(A) removes the property from the estate.[19] Ford argued that according to section 521(d), nothing in the Code limits the rights of the creditor to pursue state law contract rights when the property is not part of the estate.[20] Ford claimed that because Dumont failed to indicate her desire to perform one of the specified options listed under 362(h)(1)(A), the automobile was removed from the estate and therefore Ford could pursue its right afforded by the ipso facto clause to terminate the agreement under state law.

    The bankruptcy court and the Bankruptcy Appellate Panel agreed with Ford.[21] The Ninth Circuit Court of Appeals affirmed, expressly reversing In re Parker.[22] The Court of Appeals made plain that debtors in chapter 7 proceedings are no longer able to maintain secured property and avoid liability for pre-petition debt when the debtor makes no effort to reaffirm the debt pursuant to the revised sections 362 and 521. Ride-through is no longer an option and so these debtors who would otherwise be in default under state contract law must choose from the options expressly listed under 362(h)(1)(A) if they wish to maintain possession of their secured property in bankruptcy.
    So that sounds to me like if someone does not choose to reaffirm then it is removed from the estate, and not even discharged. So in a case like this wouldn't ford be able to revoke the contract and then short sale even AFTER bankruptcy?

    #2
    My understanding is that the debt is still discharged, but if you don't reaffirm, they can repossess even if you are current.

    Comment


      #3
      Originally posted by nekom View Post
      My understanding is that the debt is still discharged, but if you don't reaffirm, they can repossess even if you are current.
      Though ride throughs (ride and pay) are not legal, they are still utilized in many cases.

      Now - specifically FORD CREDIT has a bad reputation for repossessing cars where the loan is not reaffirmed - BUT MANY OTHER CREDITORS WILL BE OK WITH A RIDE AND PAY AFTER YOUR BANKRUPTCY.

      Best advice is to contact your creditor and ask them what you should expect if your car loan is not reaffirmed. UNDERSTAND THAT THE CREDITORS WILL NOT HAVE AN OFFICIAL POLICY ON THIS - so you need to ask the question differently. Simply ask them "in their experience, what should you expect?"

      Mine told me if I was not reaffirmed, as long as I stayed current with my payments, they were very unlikely to repo. That answer was enough for me to calm my nerves.

      Hope this helps.
      Over Median Income - 10/04/10--Filed Pro Se Chap 7/ No Assets 11/10/10--341 Held 01/18/11-- No Distribution/No Funds 01/19/11--Not subject to dismissal under 521(i)(1) AND --Reaffirmation Hearing Held = APPROVED 02/10/11--Discharged

      Comment


        #4
        Well I ended up speaking to someone and he said pretty its not a legal option. And then he kinda sidetracked and started saying As long as you continue to make payments you'll still have the car, the company doesn't have a history of taking a car when someones making payments.

        But even if they do repo, they can't short sale against you for not choosing a legal option can they?

        Comment


          #5
          Originally posted by JGra View Post
          Well I ended up speaking to someone and he said pretty its not a legal option. And then he kinda sidetracked and started saying As long as you continue to make payments you'll still have the car, the company doesn't have a history of taking a car when someones making payments.
          Smart move to call your creditor. Most people for some reason do not and end up making non-informed decisions. I am glad you called them and doubly-happy that they are very unlikely to repo if you simply keep making payments.

          But even if they do repo, they can't short sale against you for not choosing a legal option can they?
          If your loan is NOT reaffirmed and they do end up doing a repo after the BK is discharged, the short answer is NO they CANNOT DO A SHORT SALE (and force you to come up with the difference.) The BK will wipe away their legal right to pursue you for any shortfall. The BK does NOT wipe away their legal right to opt to repossess a vehicle (as they still hold title.)

          By the way - the same holds true for a stay-and-pay on a residential mortgage.
          Over Median Income - 10/04/10--Filed Pro Se Chap 7/ No Assets 11/10/10--341 Held 01/18/11-- No Distribution/No Funds 01/19/11--Not subject to dismissal under 521(i)(1) AND --Reaffirmation Hearing Held = APPROVED 02/10/11--Discharged

          Comment


            #6
            Should I record a conversation with them saying that? or does it really not matter

            Comment


              #7
              Originally posted by JGra View Post
              Should I record a conversation with them saying that? or does it really not matter
              Since it is not an official policy - it really does not matter. What does matter is you now understand how they will more than likely behave. Many other things to "sweat" during a BK - and this should be lower on your totem pole.
              Over Median Income - 10/04/10--Filed Pro Se Chap 7/ No Assets 11/10/10--341 Held 01/18/11-- No Distribution/No Funds 01/19/11--Not subject to dismissal under 521(i)(1) AND --Reaffirmation Hearing Held = APPROVED 02/10/11--Discharged

              Comment

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