This post probably will not help you much, but may give a little perspective. We have a 2004 VW Jetta TDI wagon that we bought new, and paid cash for it in 2003. Don't ask how they figure automobile years--it is weird.
Shortly after that, we took out a loan on the car with our CU trying to catch up with our debts. When we filed BK Dec. 28, 2007, we had about another 10-12 months to go on the loan. The CU required us to reaffirm the loan or we would be dropped. 'Hub had been with this CU for 40+ years and wished to continue doing business with them, so we did.
So this is not exactly an upside-down car note situation. I hope it helps.
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To Reaffirm or Not to Reaffirm ... That is the Question!
The 16th Edition of the NOLO book entitled “How to File for Chapter 7 Bankruptcy” suggests that a debtor wishing to file a reaffirmation agreement on an automobile attempt to negotiate with the creditor to reduce the value of the underlying loan to the replacement value of the vehicle. Specifically, on page 100 of the 16th Edition, NOLO recommends that a debtor not “reaffirm a debt for more than what it would cost you to replace the property.”
However, other sources available online suggest that the 2005 Bankruptcy reforms explicitly say you must reaffirm the entire amount of the debt under a Chapter 7.
For instance, thismatter dot com/money/credit/bankruptcy/chapter-20.htm (and other similar websites) says that “[i]f you purchased the car within 910 days of filing for Chapter 7, then the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 prevents you from redeeming the car by paying only its replacement value. You must continue making payments on the full debt to keep the car.”
It seems to me that the provisions of the BAPCPA that ThisMatter.com and similar sites refer to above is strictly related to Chapter 13 cases and that suggesting that it applies to Chapter 7 cases is an error.
Aside from whether it's good policy to ever reaffirm a debt under Chapter 7, is it the understanding of people here that this provision preventing a negotiated reaffirmation agreement for an amount less than the value of the underlying loan only applies only to Chapter 13 and that a Chapter 7 filer is free to negotiate a lower loan value under a reaffirmation agreement without fearing BAPCPA, Section 1325(a)?
(DAE: Chapter 7, pro se filer)
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