unusual auto loan problem

[freshstart2006]

I filed chapter 7 pro se. My only problem is this: I was a member of a credit union, and had my auto loan and a credit card through them.

When I filed, I planned to reaffirm my car loan debt of $2500. When they sent me the reaffirmation agreement, they included my credit card balance because they say it is also secured by the auto loan.

My car is supposedly worth $4000 and that is why they say they can do that. But the car is not in great shape and I feel that is unfair.

What can I do besides surrendering? I want to keep the car until I save up to get a better, more reliable one with a payment I can afford.


One more thing, I haven't heard anything back from the courts since my hearing on dec 6. Is this normal? A no news is good news kinda thing? My income was slightly higher than the cut off, but I passed the means test with flying colors.

Thanks in advance for any help and advice.

[SinkingFast]

That's the way CU's do business. If you're gonna keep the car, you'll probably have to pay everything you owe. If you don't reaffirm, most likely they'll freeze whatever checking and/or savings you have with them and take the monies from those accts as well.

Filing Ch 7, you can surrender the car you have now and ask for a 722 Redemption Loan. It's a section of the BK Code that allows you to "redeem" an asset. Some people refi the car they have. Or, you can choose from among cars the 722 Lender has. Or, you can possibly buy a car from an approved Dealer. Depends on the 722 Lender.

You'll have to ask your attny about a 722 Redemption Loan. Your attny has to be on board with it. And the Trustee will have to agree as well. But you're already making payments, so getting a different car in the same monthly payment range may be an option for you.

[lrprn]

When I filed, I planned to reaffirm my car loan debt of $2500. When they sent me the reaffirmation agreement, they included my credit card balance because they say it is also secured by the auto loan. ... What can I do besides surrendering? I want to keep the car until I save up to get a better, more reliable one with a payment I can afford.

When you signed your credit card agreement and/or auto loan agreement with the credit union, there probably was a cross-collateralization agreement included that gave them permission to dip into one account to cover losses in a second held at the credit union. Do you still have your original loan or credit card signed agreement?

Although the new bk law says that you are to either reaffirm, redeem, or surrender assets when you file, many filers are finding that in the post Oct 2005 bk world, you can still make the choice to do nothing. The lender often does not really want the car or other asset - what they want is the money associated with it. Unless the asset is worth considerably more than the loan you owe, it's to a lender's advantage to allow you to continue making the loan payments on time because they will realize their profit more reliably than seizing your asset and then having to go through the trouble to sell it, possibly at a loss.

There is a risk in choosing not to sign a reaffirmation agreement because the lender can then repossess any time they wish to. Small, local credit unions are known to be more prone to repossess than banks and other bigger lenders. Only you can decide if the risk in your own situation is worth it. (Personally I think that the credit union is trying to get you to pay off their credit card debt plus the auto loan this way stinks, even if it is perfectly legal if there was a cross-collaterization clause in the original paperwork.)

[no_it_all]

<snip>
Although the new bk law says that you are to either reaffirm, redeem, or surrender assets when you file, many filers are finding that in the post Oct 2005 bk world, you can still make the choice to do nothing.

This is exactly what I did...have been making the payments and the lender is happy and I am happy...it is a beautiful thing...

[freshstart2006]

Thanks everyone for your advice. I just applied through www.722redemption.com, so we'll see what they say.

Whew, what a load of worries off my shoulders!