Credit Unions & Reaffirmations

[danaf]

There's alot of talk on the board about CU's & reaffirmations. I have a car loan with a CU but luckily no other debt with them. I've also never been late with my payments and don't intend to be.

I decided to be proactive today and got ahold of the person at the CU who deals with BKs & reaffirmations. I told him that I would be filing and asked him to send me a reaffirmation agreement. Then we got to talking. He was totally cool. He told me the process - ie we'd both sign it and they'd file it with the courts and I'd have to go to a hearing with the judge who would decide if it's in my best interest to reaffirm. My research has shown that the judges here typically do not approve reaffirmations but I didn't mention that.

I told him that I wouldn't sign a reaffirmation agreement that had any of their attorney fees in it or that changed the terms of the loan. He said that they don't do that. So then I probed. I asked him if they would shut my checking account down, he said no. I asked him if they would reposses my car if I didn't reaffirm - he said no...only if I was late or extremely delinquent on paying. I told him I really like my car and intend on keeping it and making payments and that including them in the bk will just be a formality for me (which is true). We spoke further about statements - which I've never received anyways because the payment comes out of the checking account I have with them....and how I would never receive statements even after the bk (if I don't reaffirm) because then it would look like they were trying to collect on a debt that was discharged. No big deal. It was a really friendly conversation and he was totally laid back and nice to speak with.

I'm sure they know that the judges here don't like to approve reaffirmations and therefore they are happy if you just continue paying on the loan. It costs them money to repo.

The bottom line is that it looks like I'll be able to do a ride-through like I wanted. So I'm happy about it. I have a vehicle that is a 'consumer most wanted' and I was a little worried about it. Also - I'm not heavily upside down on the loan. I am upside down but only by a few hundred since I put some down when I bought it.

And I'm thinking alot of CU's work differently but wanted to post this for anyone who might be in my situation and wondering about CU reaffirmations vs repossession. Now if I had other debt with them that I would be discharging - the outcome of the conversation may have been different....I'll take a look at their reaffirmation agreement but all in all, I have no intentions of reaffirming at this point.

[sharksfan]

Just keep in mind that with no reaffirmation agreement in place your CU can repo the car even if you payments are current 6 months down the road.

[danaf]

yeah - I get that. But why would they do it if they are getting paid on time every month? It would cost them money to repo.

Let's be honest - they aren't going to repo if they are getting paid according to schedule. I've never given them a reason to think they won't get paid on time. And if I were to loose my job - .....well you get the point. I'd rather take my chances on this one.

Also, let me add the point that even if I tried to reaffirm, the judges in my district typically rule against reaffirmations as per my research. The CU's know this - so what's the point in reaffirming? The CU's are still getting paid and if such time came that I could not pay, then they can repo the car and sell it. And I won't be held liable. I can live with this scenario just fine.

[FreshLikeADaisy]

Sounds like a winner, Danaf!

[treadingwater]

Thanks!

Danaf,
Thanks for sharing your story, I have almost exactly the same situation. A car I want to keep, with a ride through, never 30 days late, only 500 upside down, financed with a CU and no other debt with them. We haven't filed yet, but my atty. reassured me that CU's are not in the car-selling business and usually are not likely to want to reposses a car. I'm still very nervous and your post really helped! Thanks for sharing your story...

I'm afraid to call them until we file.

[PoorGrammyinBK7]

They can?

Just keep in mind that with no reaffirmation agreement in place your CU can repo the car even if you payments are current 6 months down the road.

We have 2 vehicles with the same credit union (plus our house). Well we would reaffirm the house and 1 car, but prefer not to reaffirm the other one (current on both) ... so they can take the other car - when? How can they if you are current?

Have not filed yet...

[keepmine]

We have 2 vehicles with the same credit union (plus our house). Well we would reaffirm the house and 1 car, but prefer not to reaffirm the other one (current on both) ... so they can take the other car - when? How can they if you are current?

Have not filed yet...

You have to find out if all of the loans are cross-collateralized. If so, they can insist on all debts being reaffirmed.

[Summerbreeze]

Will the trustee let you keep something that is is cross collateralized when you file ch. 7? Like a car and a credit card from a credit union if the credit union say all or none?

[FreshLikeADaisy]

Summerbreeze, just fyi, you can reaffirm any debt in a Chapter 7: if you have an atty and the atty approves, great. If you don't have an atty, you have a hearing and the judge approves it. It's really not up to the trustee.

The thing about cross-collateralization is from the creditor, not the trustee or the court. Basically, what Keepmine is saying is that the creditor -- this CU -- has the right to refuse to allow you to reaffirm the car loan (thus refusing to allow you to keep the car) unless you also reaffirm ALL your debt with them. If you get into this situation, definitely talk to your atty, because he may be able to tell you how you can keep the car without reaffirming the remainder of the CU debt.

On the other hand, the trustee is looking for items with value to seize and sell. Your car, having absolutely no equity, is useless to him, so it's immaterial to him whether you keep it or not.

However, be forewarned. The chances of you keeping a credit card acct are slim to none, regardless of the trustee or the courts: it is standard business practice for any creditor to close ALL unsecured accts once someone declares bk. If you reaffirm, you agree to pay that debt, but even that is no guarantee they will reopen that credit line to you. So why reaffirm just to keep that car? Chances are good you can do a ride through and not sign anything, but you have to be incredibly careful and keep those payments absolutely current for the life of the loan.

Your best bet is to do a ride through on the car if you can, reaffirm the car *only* if you can't, and allow the remainder of your debt to this CU to be discharged in your Ch7. After your Ch7 is over, you can then start rebuilding your credit elsewhere. But please don't expect to keep any unsecured credit lines open through your Ch7; it just doesn't happen.

Good luck!!!

[Summerbreeze]

Thanks FreshLikeaDaisy! I don't want to keep that credit card, just scared the credit union might not let me keep the car if I don't keep both, I'm probably worrying for nothing, I will be hiring an attorney and I'm sure he will know how to handle this situation.

[PoorGrammyinBK7]

What about reaffirmation in a Chapter 13? Now I am thinking about not reaffirming anything - house or cars, but still continue paying as we always have, on time. Can I do that? I am in Florida. How can the credit union take the collateral if payments are current? I don't understand that.

[keepmine]

Grammy, you need to do a search using the terrm cross-collateralization. That's what gives lender the authority to take those sorts of actions. Basically, if you have cross-collateralization in a contract, all loans are collateralized . They're all linked together. Does not matter if they are secured or, unsecured. That's the stick they use. If you wish to keep the secured debt, they force you to reaffirm all of the debt.


By not reaffirming, you are talking about a ridethrough. You need to ask your lawyer how your district handles that. Some districts allow it and others don't.

[PoorGrammyinBK7]

He (atty) has strongly suggested we do NOT reaffirm - so it must be allowed here.

I just don't fully understand. I would definitely pay the payments - on time as always - preferably outside of the BK - but I just feel that if we are going through all the hassle and consequences of BK, might as well have the debt "discharged" - should anything happen in the future where payment becomes impossible - or should the bottom continue to fall out of the real estate market. But maybe I am missing something.

Please - any info/experiences that anyone wants to share would help us make this decision....

Thanks,

PoorGrammy (May not be a 7 now - may be a 13)

[ThreadsSnapping]

The only problem I can think of is that they may not give you the title back after the car loan is paid off if you don't pay back everything.

[PoorGrammyinBK7]

Forgot to mention that we have a BALLOON mtg - comes due in a little over 2 years! I am worried that if we have problems refinancing because of the BK and then if the market is still down anyway - we might just be able to let it go IF we are able to "ride through" and not sign a reaff... But we will sign one if we have to.