Lender never offered a reaffirmation agreement

[Pizza]

Time is ticking away and the car loan that we indicated "Reaffirm" on our statement of intentions...

The lender (credit union) never sent the reaffirmation papers to the attorney. Is this a good thing or a bad thing? We are keeping the car and are current. If the lender missed the boat for demanding a reaffirmation, does it become retain & pay after discharge. Or can they repossess the vehicle anyway? We haven't heard a peep about it. The car is Dodge (chrysler).

[rt31]

In our case we had 2 car loans...1 from a local bank, the other thru Toyota Financial. We stated that we intended to keep both and continued to make payments all the way thru the bk process.

We received reaffirmation paperwork from Toyota, but none from our local bank. We are continuing to make payments on both. Our chp 7 was discharged in September 2012.

We haven't had any attempts by the bank to get the car back and recently I requested credit reports for my husband and myself and I was very surprised to see that the bank was still reporting on the loan.

[Pizza]

Thank you for sharing your experience. Ours is through a local credit union. Perhaps they don't get as excited about it as the Big Auto Financials.

[chubbs]

Hiya, my lender refused a reaffirmation agreement on my vehicle, It's a voluntary thing on both our part and theirs. The drawback is that the loan, even though you're current, becomes a negative account. It was quite a blow to me, I had never considered that they might turn down the opportunity to still have me on the hook for the loan. It was my one positive tradeline.

The account is now considered negative but the payments are still reported. After I discharge I plan on trading the car in. I'm hoping I can get the account listed as positive after it's paid off. Best of luck to you.

[keepmine]

You've done what the law requires-offered to reaffirm. The code says nothing about the offer must be accepted.
You should be fine. Just keep paying.

[kornellred]

What does reaffirmation of a car loan actually do, if it happens to be agreed upon by the debtor and the creditor (and the BK Court, of course)?


Whether or not reaffirmation occurs, the car loan is discharged in bankruptcy. That means the debtor is no longer required to pay the balance. The creditor will repossess the vehicle if the debtor stops paying. I guess it must have something to do with Chapter 7 specifically....

[LadyInTheRed]

What does reaffirmation of a car loan actually do, if it happens to be agreed upon by the debtor and the creditor (and the BK Court, of course)?


Whether or not reaffirmation occurs, the car loan is discharged in bankruptcy. That means the debtor is no longer required to pay the balance. The creditor will repossess the vehicle if the debtor stops paying. I guess it must have something to do with Chapter 7 specifically....

If a car loan is reaffirmed in BK, the loan is not discharged. If you later default, the lender can repossess the car and sue for a deficiency judgment if the car was under water.

[kornellred]

Thanks for the wake-up call, LITR. I should have known that.

[Pizza]

Called the attorney - the credit union never sent any agreements over and our discharge is today (YAY)...

So whatever the outcome, it's too late now.

[Pizza]

Oh, yeah... I should have added:

Attorney said that since I indicated my intention to reaffirm, the creditor (if they so demanded) should have prepared an agreement and sent it to him, for us to sign, within the discharge window. This was not up to us nor him to prepare, since the creditor has the associated information for interest rate, term, etc. Our mortgage company didn't prepare one either.

I was surprised that they did not prepare one, since Chrysler seems to be notorious about this demand, as are some credit unions. I'm not really even sure which one owns the note - the CU or Chrysler...