What happens to loans you are keeping directly after filing Chapter 7?

[Janetdoe]

I'm very confused and anytime I google this information I don't get what I'm looking for. We filed Chapter 7 on Thursday. Some of the loans we are reaffirming (a camper) and my student loans have stopped bills and list nothing due. I realize these won't be discharged, but am I supposed to pay them while the Chapter 7 is going on? Or do I wait until discharge and then start paying again? I'm very very confused and I don't want to do the wrong thing. also Is this a matter that varies by state? I'm in Florida if it helps. I don't want them to tell me I don't have to pay for now then I don't and then they repossess it for non-payment.

[leonel9]

The automatic stay prevents creditors from collecting on debts, including student loan debt. Your student loans are most likely in forbearance until you receive a discharge. If you want to continue making payments, you should ask the servicer if they will accept your payments -- but you're not required to do so.

This does not vary by state.

For other loans, such as the camper you are reaffirming, you will probably either want to keep the account current, or set the money aside in the event payments are not accepted. If you're working with an attorney, I'd consult with them and make sure this makes sense. For example, what if you instead choose to surrender the collateral, but made payments? You'd have a difficult time getting those payments back.

[Janetdoe]

Thank you. I noticed my mortgage didn't draft this morning as well. I put in an email to my attorney but I haven't heard back.

[Janetdoe]

So what did any of you guys do after filing Chapter 7 and before discharge with your loans? Those are for things you are keeping.

[leonel9]

I panned to keep two loans current: My first and second mortgage on rental property. Although I plan to keep them current, if there ever comes a point where I need to walk away, I'd appreciate that option. Plus, not having that much debt reported on my credit report appears to help. So I choose to retain/stay and pay. The loan will be included in my BK, but I'll get my deed after the mortgage is paid off.

For my auto loan, I was upside down $9,500. I choose to redeem the vehicle using a 401(k) loan. The judge initially denied the redemption using a 722 lender, stating the interest rate was too high.

I'm not sure if this helps you -- but that's what I've done. Unless there is a compelling reason to reaffirm a loan (e.g. they're offering a lower principal amount or lower interest rate), then the reaffirmation generally only protects the lender.

[SeekingZero]

The automatic stay prevents creditors from collecting on debts, including student loan debt. Your student loans are most likely in forbearance until you receive a discharge. If you want to continue making payments, you should ask the servicer if they will accept your payments -- but you're not required to do so.

This does not vary by state.

For other loans, such as the camper you are reaffirming, you will probably either want to keep the account current, or set the money aside in the event payments are not accepted. If you're working with an attorney, I'd consult with them and make sure this makes sense. For example, what if you instead choose to surrender the collateral, but made payments? You'd have a difficult time getting those payments back.

One thing I'll share form personal experience is that my student loan, about 6.5K when I filed, went into forbarence. However, the interest continues to accrue. Not a surprise to most I would think, but that 6.5 is now over 7k that I owe. I have no hope of paying it. (My wife split and left me holding the the steaming bag of debt, which was all in my name including the mortgage) The interest is a killer! no wonder they don't' get discharged! Wealth is being created out of thin air, but for who? Student loans drive the economy in this country almost as much as mortgages. Google it. I'm by no means a socialist, but something needs to change with student loans. I work at a university and see many students graduate with debt in excess of my mortgage, and with the poor amount of good paying jobs in my state, they have no choice but to default on loans or move out of state for better jobs. Walmart is not going to pay you enough to cover 150K in student loans, plus living expenses. Many students whom i stay in touch with either live at home still 10 years after graduation, or live in an apartment with 4 other people in the same boat. This is in many cases, not all i will admit. Some of these young people would have been better served entering the work force at 18, as an apprentice in a trade, then wasting money and 4 years accruing debt for a degree that will not pay off. Thanks for listening to my rant.

[krielly]

Do NOT reaffirm that RV loan.......no need..........As long as you continue to make payments, you're fine. Any online access to accounts (mortgage, RV, etc) which you had prior to filing is likely to be disabled. You will want to contact your lenders (ask for the BK dept) to find out how to submit payments. Don't get behind on anything you wish to keep.