Keeping car loan in Ch. 7 BK

[LinSC]

We filed Ch 7 and kept our car loan. The attorney told us that as long as we kept the payments current the bank would not repossess the car. And we originally thought we would need to reaffirm the car loan but our attorney advised us not to reaffirm.

When checking our credit report today, Equifax shows that the bank holding our car loan has $0 balance - Included in Bankruptcy Chapter 7 Auto. I thought we excluded the car loan from the bankruptcy. We also had a VISA with the same bank that holds the car loan but it doesn't state that the balance is included in the Bankruptcy as it should. Do you think this is an error by the bank and/or Equifax? I thought that our continued on time payments for the car loan would help improve our credit score considering we've never missed a payment since inception of the loan in 2002. How can we use that good payment history if Equifax isn't going to capture it?

I think I have a valid reason to contest the error but am not sure and wanted to ask. We're also expecting our discharge early June. When should I start to contest errors such as this on our credit reports? Before or after discharge?

Thanks.

[onepowerfullady]

Someone correct me if I am wrong. I think that if you do not reaffirm that debt then you have to keep the payments current because they reserve the right to come and get that vehicle, but you will not see an update to your credit report. I think that the debt has to be reaffirmed for them to start reporting your history to the agency again. I hope that I am making sense....

[SinkingFast]

OPLady is right!

Since you did not reaffirm the car loan, the debt was "officially" discharged in your BK. As long as you remain current on your payments, the Lender will generally allow you to keep the car. But, if something happens and you're gonna be late with a payment, be sure to contact the Lender. Let them know what's going on. Otherwise, they may send a "Repo Man" to come looking for your car.

One plus to not reaffirming,........ If you get into some sort of financial bind down the road and cannot keep up the payments, you can simply arrange to turn in the car and walk away from the debt. No financial responsibility for the car whatsoever.

Even tho it won't show on your Credit Report, you should be able to get a letter of reference from the auto loan Lender stating you've continued to make your payments in a timely manner.

[BrokeStudent8]

BE CAREFUL!! All of that depends on what state you're in. I declared in TX, and the judge told me that if I wanted to keep my car, I needed to reaffirm. He said I was free to not reaffirm if I wanted, but that I would be playing roulette with relying on my car's presence. He said even if I made payments (this situation is w/o reaffirmation) the bank reserved the right to repossess the car at any moment. What state are you in??

[SinkingFast]

BE CAREFUL!! All of that depends on what state you're in. I declared in TX, and the judge told me that if I wanted to keep my car, I needed to reaffirm. He said I was free to not reaffirm if I wanted, but that I would be playing roulette with relying on my car's presence. He said even if I made payments (this situation is w/o reaffirmation) the bank reserved the right to repossess the car at any moment. What state are you in??

That is true.

That's why I said GENERALLY the Lender allows you to continue making payments.

And YES the Lender does have the right to repo the car at any time. But not if you continue to make your payments as agreed in your original contract.

When a BK filer does not reaffirm a loan, such as a mortgage or auto loan, the terms of the original contract still apply. Same monthly payment. Same term. Same interest rate or schedule of rate changes for an ARM.

It's roulette in that anything can happen with the mail. Even tho you mail the payment with plenty of time allowed, the mail could falter and your payment would not arrive on time. If something happens in your life that would cause you to be making the payment even a few days late, that too is roulette.

Auto Lenders aren't in the business of repo'ing cars. They're in the business of making money off of interest.

Repo'ing cars costs them money. Continuing to make your payments on time continues to make money for the Lender.

[jaura6588]

Does the car still help build your credit score after bk/reaffr.?

[BassBoy]

Does the car still help build your credit score after bk/reaffr.?

If the debt was discharged and not reaffirmed, then no, the lender stops reporting to the credit bureau's. The debt will forever show a $0 balance and included in BK, even though you kept the payments currents. If reaffirimed, then yes.

[wolfledet]

question on reaffirming

So I didn't reaffirm on our loan with Ford....we owe around 9300. and we are trying to get a small suv to have more room. The problem we are having with trading it in is that we are only being offered 6500 for the vehicle for a trade. My question is...I live in Louisiana and didn't reaffirm the vehicle loan...would it be better to make arrangements for the vehicle to go back to Ford without having to make any further payments. It already lists on credit report as balance of 0 included in BK.

We can afford the vehicle but we can't afford two vehicles because my husband goes out another 6 months next month for another surgery. So I will be the only one working 3 parttime jobs.

Just curious if anyone knows....thanks!

[PoorGrammyinBK7]

If the debt was discharged and not reaffirmed, then no, the lender stops reporting to the credit bureau's. The debt will forever show a $0 balance and included in BK, even though you kept the payments currents. If reaffirimed, then yes.

So you are saying that reaffirming a car loan helps you get credit back sooner - I would guess it does for a home too? Is this from personal experience? Did you reaffirm? Thanks!