Reaffirming Car Loans

[dp1969]

Can the bank (in this case a Credit Union) decide that they want the balance of the loan paid if you choose to reaffirm the loan? I thought it was a sure deal...you could keep paying the loan???

[Lindsay]

I think it depends on what state you are in, but I've never been able to find a list of those states online. Apparently some states won't let the bank repo property that is current on payments. Our lawyer told us that we could just keep paying on the car loan, but not to be even a little late!

[HHM]

If you reaffirm, its as if you never filed BK on that debt. So long as you are current on the payment and keep making the payments, the bank cannot accelerate your balance.

The real question is whether you should reaffirm? Most people DO NOT reaffirm and simply keep making payments (assuming you were current on payments going into the BK). The lender will not repo so long as you keep making payments regardless if you reaffirm.

[dp1969]

If you reaffirm, its as if you never filed BK on that debt. So long as you are current on the payment and keep making the payments, the bank cannot accelerate your balance.

The real question is whether you should reaffirm? Most people DO NOT reaffirm and simply keep making payments (assuming you were current on payments going into the BK). The lender will not repo so long as you keep making payments regardless if you reaffirm.

We filed on Friday and when signing the papers, I noticed the car was not under the "reaffirm" status. Questioned the lawyer (said we want to keep making payments) and he changed it. We have been current and on time with every payment (we bank there too) and need the vehicle.

[DanaS]

I filed Ch7 in September '05, and was discharged in December '05. I still have the same car that I have been making payments on for 4 years. I have never had a late payment either before or after filing. My lawyer at the time recommended NOT reaffirming, but I am not sure what I gained by agreeing to this?

My problem is that my Car Loan is with U.S. Bank, absolutely the worst lender I have ever dealt with and they were the final straw that caused me to initiate my Ch7 over two years ago because of their credit reporting practices. One month they would say I was current and the next they would say I was behind and report that, when in actuality I have ALWAYS paid 2-3 months in advance and can prove it with cancelled checks, BUT NOBODY at U.S. Bank has any interest in the "truth". As soon as they would get it straightened out, two months later their system would show I was either current or a day behind (so they could charge a late fee), when in actuality I am always paid ahead. They even collected State Sales Tax from me up front and did not pay the State and the State CHARGED ME LATE PENALTIES because U.S. Bank did not forward the payment - took me almost a year to get U.S. Bank to pay the Sales Tax, and even then they sent the check made out to ME!

Anyway, since the day I filed Ch7, they no longer report ANY payments to the Credit Bureaus. It just says Charged Off! They keep telling me that is their policy in reporting on any car loan that was NOT REAFFIRMED? I have spent at least 40 hours on-hold trying to get this straightened out, but no luck. I don't see how I can have a perfect payment history with them (that I can prove) and my Credit Report says the loan was a Charge Off! ... I am still making payments on-time every month, but get no credit on my credit report for doing so. For the past two years they have refused to send me a single statement or ANYTHING in print because of the Ch7 - so all I can get is verbal communications which changes every time I call them. Well, now I just used the last of my payment coupons in the coupon book and have 24 payments left and I get a letter from them today that says they cannot issue me a new payment book as that could be interpreted as an attempt to collect the debt - BUT THEY WERE NOT EVEN INCLUDED IN THE BR? So if I did not reaffirm, does that mean they cannot contact me? What am I missing??

My home loan was with WAMU (still is). It was not reaffirmed, and I have always received payment statements from them every month and they also show my loan status every month. They also show my perfect payment history on my home loan every month on my Credit Report for the past 12 years. Why is a car so different from a home??? Man am I confused! What is my incentive to continue making car payments on time? - are we saying that because I did not reaffirm that they cannot communicate with me to collect the debt? If so, how could they reposes the car if I went delinquent - is that not an attempt to collect on the same debt? Something just is not adding up... and with this system there is nothing to stop them from claiming that I owe late fees on every month of the loan come payoff time - I cannot verify or prove ANYTHING as to their records - all I can do is prove what I have done with cancelled checks, but NOBODY cares about that!

What can I do? I would be willing to refinance the balance, even at a slightly higher rate just to be rid of U.S. Bank, but besides the fact that I have a Ch7 on my record, who would want to lend on a car when my current car loan says it was a Charge Off of the credit report?

[HHM]

The only problem is, even if you Reaffirm, most lenders still DO NOT report payment history.

There simply is no guarantee how the lender will report the account. The main benefit to not reaffirming is that you are no longer personally responsible for the debt. For most people in a chapter 7, even after BK, their financial situation is still tenuious; so generally speaking, it is in a persons best interests to not reaffirm. That is especially the case if the debtor is in too much car (i.e. car payment is more than 8-10% of your gross monthly income).

[HHM]

We filed on Friday and when signing the papers, I noticed the car was not under the "reaffirm" status. Questioned the lawyer (said we want to keep making payments) and he changed it. We have been current and on time with every payment (we bank there too) and need the vehicle.

Keep in mind, a reaffirmation is not official until a reaffirmation agreement is filed with the court and approved by the BK judge.

[woohoogirl]

Keep in mind, a reaffirmation is not official until a reaffirmation agreement is filed with the court and approved by the BK judge.

If I want to keep my vehicle and house and the judge thinks it will be a hardship, what happens then? I remember reading something about having a family member to help out, but I can't find it. Can someone enlighten me? I've got my fingers crossed that I don't have to sign reaffirmation agreement for my stuff...but I'm not planning on things going the way I want them to.