Paying off car instead of reaffirming?

[MaggieMay]

When I filed my bk papers, I checked the box that I was going to reaffirm my car.
Today at my 341 meeting, I confirmed that I was reaffirming.

Then on my drive home, it occurred to me that the trustee gave me the go-ahead to use my tax refunds any way I wish, as they consisted of EITC, which is exempt in my state. So I decided to pay off my car (I owed $4,500 on it). I told my bank so they wouldn't see the amount and freeze my account and then I went to the lender's website and click click click, car paid off!

Then it occurred to me.. how does this affect my reaffirmation? I have nothing done with it so far. No deals have been made, no papers signed or filed. Nothing at all has been DONE about the reaffirmation other than my confirming that I was going to do one.

So.. what do I do now? Can I just not file a reaffirmation? Should I send proof of having paid off my car to the trustee and the court, so no need for reaffirmation? This is the one downfall of pro se filing, these random questions, which I have googled every possible combination of keywords for and still can't find an answer.

Thanks for any insight anyone can give me!

[justbroke]

A lender is responsible for generating the appropriate forms for a reaffirmation, and to send them to you for signature prior to discharge. If the lender sends you reaffirmation paperwork just call their bankruptcy department and ask them to look at the account.

I don't know if you used a "payoff" amount or you just paid the balance that you viewed on the website. You may want to see if there was any accumulated interest -- known as the "per diem" -- which accumulated between the last billing cycle and the date that you paid off the vehicle.

Random Pro Se Questions? We love them here!

[MaggieMay]

Thanks again, justbroke! You're a wealth of information!

I didn't realize it was the lender's responsibility to send papers. I do know through talking to them on the phone that they had no intention whatsoever on negotiating anything with me. The first person I spoke with was all agreeable and nice and then the next person I talked with said they had no idea why on earth the first person would say anything like that, etc etc.

To answer your question about payoff, when I go to the website, it shows how much I owe and then right underneath that, it says "This payoff amount valid through 3/30/17".

So I assume that's the payoff amount.

So glad I won't get in trouble for not filing a reaffirmation after saying that is what I was going to do. Whew!

The website says it might take up to 4 business days to process, but I cannot wait to see that $0 balance!

[MaggieMay]

So, do I need to let the trustee/court know in any way that the car is paid off and that there will be no reaffirmation? Or is it just a non-issue to them? Hmmm..

[justbroke]

What you actually did is called a redemption. With a Court-forced redemption you would have only paid the vehicles current market value (clean retail) or what you owed, whichever would have been less. I don't recall if you were underwater with the car (was it $6,000?).

In any event, you're fine. You don't need court/trustee permission, but you may have been able to save some money if the vehicle was worth less than the balance. I would have waited a little longer and perhaps went the court-forced redemption route albeit it may have turned out the same.

[MaggieMay]

Yes, you remembered correctly. I owed $6,000. I valued it at just over $4,000 clean retail IF they fixed the bodywork, which is just a bunch of cosmetic dings and small dents AND the fact that the front end got ripped off 3/4 of the way getting pulled out of a snowbank - the body shop put it up and from underneath, ziptied it all together for a quick fix. To actually fix it (replace the piece) is almost $900.


I thought I had checked "redeem" when I filed (I had a thread on here about that), but when I went back to check before my 341, I saw that I had actually checked reaffirm and when I got there yesterday, to be honest with you, I was just ready to be done (another small downside of pro se - it's EXHAUSTING. lol) So I confirmed that I wanted to reaffirm. Like I said, on the way home I realized I had the money to just pay it off (I had put $1500 on it a few weeks ago, bringing it down to $4,500 which didn't seem so painful) so I just paid it off to just be done with it.

I have some mental health issues (really bad anxiety/panic attacks, etc. plus some physical issues that cause me to become very tired and overwhelmed easily - once I get overwhelmed, I'm toast) and to me, just paying it off instead of prolonging the whole thing to save $1,000-$2,000 just wasn't worth it to me. I already saved that money by not getting a lawyer, so I just considered that part of the cost of pro se and called it good. I feel 100% completely totally at peace with that decision and am just glad to have it paid off!

My only concern is if the court is going to be upset if I don't do anything to let them know that I didn't reaffirm after all, etc. But if you are confident that I am in the clear, I am ready to just trust you and sit back and be done with it. Seriously, stick a fork in me, cause I am DONE.

[Chrysalis]

My understanding is that this is really more between you and the creditor. I don't think the trustee really "cares" whether you redeem, reaffirm, or surrender..... It's just part of the process for you to state what your intentions are -- so that the creditors are aware and can proceed from there. When you reaffirm, you are simply saying "I promise to pay what I owe" -- and you have already gone ahead and done that, so: you're good. Lucky you that they let you keep that tax refund!

[justbroke]

Just getting everything over with, I understand completely! I still don't see any issues, I was just curious.

[MaggieMay]

Chrysalis - I KNOW! (regarding them letting me keep my refund!) I must have checked a hundred times to make sure I was reading and understanding the statutes correctly, where it says that EITC is exempt in my state and I was right. Thank goodness. That refund is funding our very first family vacation (my son is graduating high school in a few months) and paid off my car! It would have been doubly frustrating if they didn't let me keep it because the whole reason I filed bankruptcy when I did was to prevent the USDA (my mortgage lender) from taking it! (And they would have! I had already been sent to the Dept. of Treasury to offset my refund)