Keeping a car...

[manglicmot]

[FilingOnMyOwn]

I do believe so.

[HHM]

Yeah, that is one of the major changes of the new law.

This debtor must have been using an older form...lol

[lrprn]

Yeah, that is one of the major changes of the new law.

This debtor must have been using an older form...lol

I must respectfully disagree with FOMO and HHM.

"Reaffirmation agreements are under special rules and are voluntary. They are not required by bankruptcy law or by any other law." From http://www.usdoj.gov/ust/eo/ust_org/bky-info/index.htm

"Reaffirmation agreements are strictly voluntary. You are not required by the Bankruptcy Code or other state or federal law to reaffirm your car loan." - From http://www.totalbankruptcy.com/cars_in_bankruptcy.htm

This website explains the reality of this situation:
"In Ohio, it is generally held that a creditor CAN repossess a car if no reaffirmation was signed even if the payments are current. But in reality, most creditors realize this is foolish to do. For example, consider a car with a loan balance of $10,000 and a value of only $6,000. Because of the negative equity, it is usually unwise to reaffirm such a debt because if you default, you will be left with a large balance. Yet, suppose you want to keep the car and cannot afford redemption. If you maintain your payments and insurance, the creditor would be foolish to repossess, because at auction they would be lucky to get $4,000 - $5,000 toward the loan. Whereas if they don't repossess, you are very likely to continue all your payments. But you can only use this option if you could live with the car being repossessed after discharge." - From http://www.bankruptcyinfo.com/CM/Cha...HousesCars.asp

Although the case law quoted doesn't say so, I'm thinking in the case mangicmot shared that the car in question was likely worth significantly more than the loan on it, so it was worth the trustee's time to go after it. Since there was no reaffirmation agreement, the courts simply said sure, take it.

Again, the new law does NOT REQUIRE you to reaffirm, redeem, or surrender. However, as the debtor, it's your decision (hopefully after discussing your situation with your lawyer) how much of a risk you are taking that the creditor or trustee will snatch the car if you don't officially reaffirm it. When car value is more than loan, the risk is high and you should reaffirm. If the car's value is less than the loan, then it's worth the risk to let it ride knowing that the creditor won't repossess (because they make more money that way) and the trustee won't go after it (because he/she can't sell the car and realize a profit for creditors after paying off the loan).

[HHM]

Technically your right, but for all practical purposes, we are all correct. If you do not reaffirm, redeem, or surrender, the creditor has the option to repossess. I suppose it remains to be seen if a creditor will be able to repossess a car that is not reaffirmed but the payments are current.

However, just realize it is NOT like the old law, under the old law, you could let a car ride through the BK so long as your payments were current...that is not the case anymore.

[ConnieS]

I think alot of it depends on the policies of the lien holder of the car also. In our case the bank than holds the note would NOT accept any further payments from us unless we signed the reaffirment with them. The bank that has out mortgage/HE loans however never required us to sign anything and has continued to take our payments all along.

[krobin02]

I asked my lein holder for my car this question point blank. Under the new law, if you do not reaffirm you are surrendering. However, it is still the lein holder's choice as to what they want to do with the property. My loan company is great. All they care about is the money. As long as they get it then I don't lose my car. So I decided not to reaffirm "just in case."