Toyota Motor Credit and Reaffirmation

[newstart68]

I filed a Chapter 7 on 10/13/06, and had my meeting of creditors on 11/13/06. I received a call from my attorney today regarding a couple issues and forgot to ask him a couple questions which are really bugging me.

1) He stated that after several attempts, Toyota Motor Credit (my auto loan) have not responded to his request for me to reaffirm my debt with them. He stated that I should continue making the payments anyway and will just have to wait to see what happens. I am afraid that they will come and repo my care even though I am making regular payments. He stated that technically they can not do that unless I am in default. I am still afraid that this will happen, and why wouldn't they want to reaffirm the debt?

2) I have a Colders credit card t(furniture purchase) that has a balance of $2900.00 (listed in my bankruptcy). They are looking for reaffirmation of the debt but my attorney states that the reaffirmation needs to be approved by the court and because I do not have any income that would allow me to reaffirm, they (the court) would deny the reaffirmation. I also have another unsecured card that was listed in my bk filing and they are looking for reaffirmation as well. My question is this....what happens if the request for reaffirmation is denied by the court? Do I still owe the money? Can they sue me? I am so afraid and really would like some advice.

Thanks.

[SinkingFast]

Your attny is right about the car. Keep your payments current. Wait and see what Toyota does. New Law does not allow for "Ride Thru" but many Creditors have been allowing people to keep assets and continue paying without Reaffirming.

Another poster has had a similar issue with Toyota Finance.

http://www.bankruptcyforum.com/showthread.php?t=11351

Sounds like Toyota has their own Reaffirmation Form they want filed and won't use the Court's form.

If you want all of the debts discharged in the BK, don't allow any of your Creditors to bully you into Reaffirming. Just because the Creditors ask, does not mean you have to agree. Just say NO and be done with it.

If you don't sign any Reaffirmation agreements, you won't be responsible for any of the debts once your BK is discharged. And NO, your Creditors cannot sue you after BK. When debts are discharged in BK, you no longer owe the debts and you have no more responsiblity to the Creditors.

[newstart68]

Thank you, I am feeling a bit more at ease. These creditors sure can make you go crazy with worry. Boy, I sure can't wait till the end of January!! Thank you for the words of encouragement. I really love this forum, it sure helps me with all my anxiety.

[FoolAndHisMoney]

I wouldn't sweat it. Unless you have positive equity and a lot of it they will not repo the car. The last thing they need is another one to auction off for less then fair market value. Just keep making the payments on it.


Why is an unsecured card company looking for a reaffirmation agreement? They usually only request this if the debt was incurred fraudulently and they settle it for less then you owe without an adversary proceeding.

[HHM]

The furniture purchase was likely a secured deal. Nearly any credit obtained to buy furniture will be a secured loan, especially if the credit was arranged by the furniture store (i.e. secured by the furniture you bought). If the reaffirmation agreement is denied by the court or if you do no sign it, the furniture company could conceivably repo the furniture. However, I have not heard of that happening, the furniture companies really have no way to dispose of the used furniture, so I wouldn't sweat it. As a general matter, I recommend that you just ignore the furniture company.

As for the other card, are you sure its unsecured, who is the card with? If its card like, Sears, Best Buy, Ciricut City etc, those are typically secured debt if used to purchase major items. (i.e. TV's appliances, etc). As has already been stated, the only time a unsecured creditor offers reaffirmation is if they have a plausible case for fraudulent use. If the later, the creditor could file a proceeding in the BK court to declare the debt nondischargeable, thus, you would still be liable to pay it after your BK.

[whatamess]

WOW Thanks for posting this...

Please KEEP ME updated on this. I have a 2004 Camry I want to keep also. Its our ONLY car. I still owe $10,000 on it. However, I down paid $12,000 on the car so it does have some equity in it. I had a settlement from my Corolla a jerk totaled that I used to pay for the down pay. I heard that Toyota was a bit harsh in BR and about reaffirmation. Im SO worried about this as well. I LOVE this car and its our lifeline right now. We cant drive another junker and need a newer car as we only have one and my DH is mechanically inept. We drove junkers for years and broke down so often AAA hated us!
Im terrified we will wak up to no car, no way for DH to get to work.
WAM

[CindyLou]

be very careful to make sure whether your furniture is even secured. HHM is right, many time it is, but not always. And it is VERY RARE for a finance company to pick up furniture. My brother had financed furniture that was secured and then filed. They threatened to pick it up if he didn't reaffirm. He told them it had water damager from Katrina (which was the the truth) and he never heard from them again. but again, I would call the lenders and confirm whether your debts are secured and where is your contract does it state secured. Many times the collection department or a third party collection company will use the secured thing as a scare tactic, but in reality its not secured. Good luck.

[ConfusedinMN]

As for the other card, are you sure its unsecured, who is the card with? If its card like, Sears, Best Buy, Ciricut City etc, those are typically secured debt if used to purchase major items. (i.e. TV's appliances, etc). As has already been stated, the only time a unsecured creditor offers reaffirmation is if they have a plausible case for fraudulent use. If the later, the creditor could file a proceeding in the BK court to declare the debt nondischargeable, thus, you would still be liable to pay it after your BK.

So if someone bought a TV from Sears on a Sears card, it could likely be a secured debt? I did that 5 years ago and am thinking about BK, would that mean that it couldn't be included in a BK, or that they may want the used TV back in the end? Hopefully just the latter, because they can have the thing if it's that important to them.

[HHM]

So if someone bought a TV from Sears on a Sears card, it could likely be a secured debt? I did that 5 years ago and am thinking about BK, would that mean that it couldn't be included in a BK, or that they may want the used TV back in the end? Hopefully just the latter, because they can have the thing if it's that important to them.

The later...even though the debts are "technically" secured, they are basically treated as unsecured debt because nobody wants to repo the used TV or used furniture (because there really is no viable secondary market for those items, at least not on the scale required for someone like Best Buy etc.). The Best Buy's, R.C. Willey's of the world, when it comes to BK, will talk tough for the first few weeks of your BK, but if you ignore them, they go away quietly, and most importantly, empty handed.

[JollyGG]

I agree with HHM.
In response to your second question - We have a few credit card companies pressing for reaffirmation due to a balance transfter and a few charges in the 60-90 day window. Our lawyer said to ignore them. He pointed out that it costs them money to object and most cc companies aren't willing to spend the money when it is a relatively small amount to them (perhaps not to us). If they do decide to object then the worst that will happen is we will be responsible for that debt and no worse off then if we reafirmed. They are just hoping you will give in to the bullying and pay. As for the secured debt for things like T.V.s, furnature, appliances - he said they will probably make a settlement offer. We actually are waiting to hear from Sears as we bought a washer and dryer on credit a year ago on one of those no intrest, no fees for a year deals. We plan to take whatever deal they offer us as we just would feel wrong keeping something we never paid a cent for. However that is our decision and I'm sure your circimstances are different.

[HHM]

We have a few credit card companies pressing for reaffirmation due to a balance transfer and a few charges in the 60-90 day window. Our lawyer said to ignore them. He pointed out that it costs them money to object and most cc companies aren't willing to spend the money when it is a relatively small amount to them

I am not entirely behind that particular strategy when it comes to fraudulent purchases and balance transfers (especially if it is per se fraud, i.e. the charges, transfers, and cash advances are within the 70/90 day period)...because you can usually get them to reduce the balance owed by up to 50% and get whatever payment plan you like (usually up to 12 months) if you go the reaffirmation route. If you let them object, then they get the full balance plus fees and costs, and it will be treated as a judgment against you which they can use to garnish wages, attach assets after your BK is complete. etc. Thus, I wouldn't ignore the reaffirmations completely, but view it as an opportunity to negotiate. Plus, if they do file an objection, your attorney will ask for more attorney's fees to defend you. No matter what, the creditors will win on the 70/90 day issues, and will almost always win on balance transfers regardless of when they are made...so creditors see this as easy money...the reaffirmation agreements are a way to save some time and hassle, but in the end, if they have to file, you end up having to pay more in the long run.

Also, it really doesn't cost creditors that much. The only out of pocket expense is the filing fee to file the adversary proceeding, and the local attorney's who represent the creditors are working on a contingency.

[JollyGG]

Actually all that the charges, transfers, and cash advances being within the 70/90 day window means, is that the burden of proof falls on me and not on the cc company. (outside the 70/90 day window the burden of proof falls on the cc company) I prove what the charges were for (daily living expenses) and prove they were not for luxury good and services and the charges are dischargeable (11 U.S.C. 523 (a) (2) (c) (ii) (II)). As for the balance transfer they can always object to discharge but probably won't push it because once again I have an easy case as the balance transfer was simply from one card to another card for a lower interest rate. I have all my statements. Plus I checked before going forward. As to them tacking fees and costs onto the full balance - that’s in the discretion of the court and would be unlikely. However If I win I will be awarded fees and costs for defending the motion (11 U.S.C. 523(d)). So the only extra cost / risk to making them pursue an objection is my lawyers fees (if I loose). I’ll take that risk. Considering they probably won’t pursue it for the less than $2000 owed. I would consider settlement but they haven’t made a decent offer yet.
After all I hired a lawyer for a reason. Plus I hired one who is well versed in the laws and has a reputation for being willing argue for his client.
However, I would add that this is a lesson to those getting ready to file. It is in your best interest to wait and then you won’t have to deal with any of this like I am.

[newstart68]

I so appreciate all the wonderful advice. Everyone is so informative and helpful. On the unsecured card the last purchase made was on 7/1/06 for gas and I filed on 10/13/06. Target is still asking for reaffirmation of all purchases from 5/12/06 to 7/1/06 about $1200.00 (no luxurey items). I will keep my fingers crossed!!! My attorney is responding to them stating I will not reaffirm so all I can do is wait....it seems like forever!!

[no_it_all]

The furniture purchase was likely a secured deal. Nearly any credit obtained to buy furniture will be a secured loan, especially if the credit was arranged by the furniture store (i.e. secured by the furniture you bought). If the reaffirmation agreement is denied by the court or if you do no sign it, the furniture company could conceivably repo the furniture. However, I have not heard of that happening, the furniture companies really have no way to dispose of the used furniture, so I wouldn't sweat it.

Me! Me! I had some furniture repo'd ... It was a cream colored leather love seat and couch...owed about 2K on it.

[SinkingFast]

Me! Me! I had some furniture repo'd ... It was a cream colored leather love seat and couch...owed about 2K on it.

So that was your stuff I was eyeing the other day in the Bargain Corner in the back of the store!!