Is this just a scare tactic ?

[gak555]

I filed for chapter 7 on July 12, 2007. I plan on keeping up my car payments. The guy at MazdaCredit told me that their lawyer would be sending out a reaffirmation agreement and that if I do not sign it, I would not be able to keep my car. Is that just a scare tactic ? In an earlier thread that I started, the impression I got was that as long as I keep up my payments they would not repo the car.

[HHM]

That is true, they "probably" won't repo the car if you continue to make the payments.

However, the law is unclear on this issue, and strictly speaking, not written in the debtors favor. The new BK law "requires" reaffirmation, redemption, or surrender. But the common "practice" has been that so long as the debtor makes the payments, the debtor can keep the car.

What is unclear is whether the debtor would have any legal right to unwind a repo when the only grounds for the repo was failure to reaffirm (i.e. meaning you were current on your payments).

Another important note is that time is on your side. Even if you sign a reaffirmation, you can rescind a reaffirmation up to the day before discharge of your case (i.e. 59 days from the date of your 341 meeting). Thus, you have the opportunity to call their bluff, NOT agree to a reaffirmation, and see what happens. Remember, so long as your BK case has not been discharge, they have to file a motion to lift the automatic stay before they can repo.

[lrprn]

One other thing to keep in mind for reaffirm vs. not reaffirm is that some states have laws on the books that prevent a creditor from repossessing a car or other secured property if the debtor is current on the payments. If you filed with a lawyer, he/she will know if your state happens to be one of them.

I sure hope you are living in one of those states because then your lender can't take your car as long as your payments are made on time even if you don't reaffirm