Car loan questions (now in BK dept)...

[moneytree]

We have 2 fairly new cars that we are paying on monthly. We've been late a few days to 30 days here and there. Mainly because of paycheck timing or no excuse (working on that!) I called up 1 of the car lenders today to get the exact amt. due and was transfered to another dept, come to find out the BK dept, and paid the bill (no fee) by phone. I recall in the past it used to cost $8 online. I never asked, but maybe because our acct. is sitting in a new dept, that they are more willing to take pymts. I gave them our routing # and checking acct. #. I made the gal repeat back our car loan acct. # after she didn't have a confirmation # for me. I don't know why, but it just made me nervous to call up my car lender and get transferred somewhere else.

The gal told me that our acct. will be in the BK dept until after discharge or reaffirmation. Our atty. advised my husband that we might be better off not reaffirming? What are your views. Yes, we've been late 30 days before and we do not plan for that to happen again, but I certainly do not need to feel like they'll be watching like a hawk. How soon do they take repossession on late car pymts? And this is only if one doesn't reaffirm?

We also have 0% interest rate on the other car and they cannot raise our interest rate, can they? I would hope that's set in stone with the original documents.

Will our car(s) loan(s) go back into the regular hands of the financing dept, rather than BK dept. after discharge or reaffirmation? Or do they create another dept. for post-BK people!? lol

[HHM]

If you have a 0%, you want to reaffirm that account. Because the reaffirmation agreement will set out the terms, again and hopefully solidify that interest rate.

This has been coming up lately. The ONLY benefit to not reaffirm is that if you default on your payments in the future, and the car is repo'd, the finance company cannot come after you for the deficiency balance (i.e. if the car is worth less than you owe). However, the risk to not reaffirming is, that the finance company can repo your car's whenever they want, whether you are a late on payments or not. The new law requires reaffirmation, redemption or surrender. Although, many lenders are acquiescing to "ride through (where you simply continue to make your payments), the letter of the law does not allow that option. Failure to reaffirm a secured debt gives the secured creditor the right to repo the property.

[moneytree]

Thank you!

It didn't sound right to me to not reaffirm. What is the benefit of not doing that? Does it cost more $ with the atty to reaffirm? These are questions my husband couldn't answer. He sat with the atty's, I didn't. What is the time frame to do this and how do we reaffirm?

Thanks again--

341 today--just waiting for the discharge now.

[HHM]

Whether the attorney charges extra will depend on the attorney, some do as a matter of practice, some don't (so long as there is no hearing). You need to complete the reaffirmation process before you are discharged. Normally, the attorney for the car finance company prepares the reaffirmation agreement and sends it to your lawyer for review. If all checks out, you sign it, then it either gets filed with the court by your attorney, or the attorney sends it back to the finance company, and they file it with the court.

Generally, if you are represented by an attorney, there will not need to be a reaffirmation agreement, but if you are pro se, there will be a hearing. Even if you are represented by an attorney, the judge may still want a hearing to make sure you understand the implications of a reaffirmation agreement.

[BKTango]

HHM is correct. You have a great interest rate on those loans you will want to hold that loan, it will be locked in with the same terms. Even though it is fairly easy nowadays to resume life after bk, you may not be able to get that great of a rate for awhile. The same is said for reaffirming a mortgage. Of course if you do not reaffirm should something ever happen you can walk away and not owe, but be forwarned you will be walking because without reaffirmation the moment you are late, they want their property. If you reaffirm and say you have a reallly bad month, they are more apt to work with you to get you current again. Reaffirmation is just like HHM said, a set of papers signed by you. You will be in the in-house bk department of the loan holder until your discharge, again this is the same for a mortgage. Once you receive your discharge and the lender gets the paperwork you will be transferred back to the regular billing department. As long as you make your payments on time you will have no worries.

Also be sure you make your payments when you know you should be. As in our case with the mortgage and some with their car payments, the lender may or may not send you statements as that would essentially be considered "collecting a debt" and that of course is not allowed during bk. So you have to make sure whether you receive statements or not, until your discharge you make those payments regardless. Once you are discharged you will receive statements again as normal.