Repo after Filing

[lovemyhouse]

Hello. I met with my atty today and he said that we qualify for Chapter 7. We don't want to keep our car but he said that he needs that expense in order for us to qualify. He told us not to sign a reaffirmation agreement with the car co. and then let the car go in 3 - 4 mos.

What happens if the car gets repo'd after the BK? Are we obligated to pay the difference to the car creditor if repo'd?

Thanks,

[familyof7]

No you are not liable for any deficent balance as long as you do not sign a reaffirmation agreement

[JRScott]

By keeping it through the bankruptcy you'll meet the means test. By not signing a reaffirmation you are telling the car company that you are not planning to keep the vehicle or do not feel that you can afford it. So once you default and let it go back you'll owe nothing and also wouldn't take another hit on your credit score.

[SinkingFast]

From what you said, you need the Secured Debt of your car payment to swing the Means Test in your favor to get a Ch 7.

Most likely what your attny will do is file an "Intent to Reaffirm". That will tell the Court that you're planning on Reaffirming the debt and allow your attny to calculate the payment into your monthly expenses.

But then,......... You'll never actually sign a Reaffirmation Agreement or file one with the Court. It's the sneaky way to "Ride Thru" under New Law.

If you're a No Asset Ch 7, the car loan will be Discharged with all your other debts in the BK. Then you're free to Surrender the car when your ready to the Lender.

Just be sure to keep the payments current and paid on time until you are ready to surrender the car.