Car Reaffirmation Question

[Summerbreeze]

I filed chapter 7 on June 27th, and will be keeping my car, I also have a credit card with this credit union, I spoke with the credit union today and she told me that there is a cross collateralization clause but they base it on how much the car is worth, the amount I owe and how much the credit card balance is; she said my car is worth about $13k, I owe $16k, credit card balance is $5k, she said since I owe more than the car is worth they would charge off the credit card balance and I could reaffirm the car, keep the same terms, right now my interest rate is 5%.

Before I made the final decision to keep my car I did check with 722 redemption and was told that they could approve me for a 5 yr loan, at 24%! after 12 payments they could refinance for about 18%. I really don't want to go that route. I read somewhere on one of these boards that a credit union can try to keep your pink slip after you pay off the car until you pay the credit card, I'm not sure if that is true. My attorney said that is illegal because the debt was discharged in the bankruptcy. The credit union also told me that they would not try to hold the pink slip they would give it to me once the car is paid off. I asked her can I get that in writing and she said that they don't have a form for that but they would definitely write the credit card debt off and that I could not be a member of the credit union anymore and would not be able to pay online, I could care less about that.

What should I do?

Thanks in advance for your response.

[Cali]

I wouldn't trust the credit union, especially because of the cross-collateralization.

[Summerbreeze]

I know Cali, but is it legal for them to try and make me pay for a debt that was discharged in the BK? I would hate to get a used car from 722 for 24% interest. I have to have a car and no money saved

[PoorGrammyinBK7]

Are you current on payments? Seems like if you are, they might not repo it - just want you to think they will. What state are you in? I wonder if they would really take it back since you owe so much more than its worth? Realistically, who is gonna buy it from them at an auction for that much?

I am going through the same decision myself but have not talked to my credit union yet.

[Summerbreeze]

I am current on my payments, never been late. They didn't say they would repo it I'm just trying to decide if I should surrender it or keep it. My attorney said it was illegal for them to try and make me pay for the card once it's discharged, but I don't want no surprises after I pay off the car. I know that if I surrender it they will take a loss on credit card and car.

[b_girl]

If I were you, I wouldn't reaffirm the car but would just keep paying it off as usual--just don't give them a reason to repo it until the debt is paid in full (i.e. late payments). If they did try to stick me with the discharged debt later, I would then have my attorney politely remind them of the discharge.

[BK2008]

Depending on where you are, SOME car financing companies (like mine) will reposess the vehicle, even if it is current and never late, if you do not sign the reaffirmation.

How much longer on the term do you have?? What kind of car is it??

I wonder how much time you would have between the time you stop payments, and they repo. Could be you might save enough to get a least a decent down on a cheap used car, and even if you have to pay the high rates for financing, you will not be so upside down (I'm thinking a Honda or something that retains value, plus you get a 2003 or newer, otherwise financing is hard to come by on an older model)

You're in a rock and a hard place (like I am). The saving grace for me is the car is worth more than I owe, and it's a decent, reliable vehicle (altho not as fuel efficient as I would like), but I can't justify the increase in monthly payment for saving 5MPG.

[Summerbreeze]

The car is a 2006 Kia Sorrento, I still have 3 yrs to pay on it. I call 722 today just to see what kind of cars they have, the only had 4 cars, that i could consider because of the loan I was approved for don't want the note to be over $350 per month and five years, she said that I would still have to pay the taxes, for example they had one for $11k, I would have to pay $850 and still pay the money to get the tags after the car is delivered. I live in Nevada, but the credit union is in Illinois. I look over my loan papers again I don't see anything about the cross collateralization, I called the credit union and asked her to send me the paperwork that I signed that talks about this, she said the film everything and that it is probably on the back, she is still tell me that I'm already paying more than the car is worth and it wouldn't be worth them coming after me for the credit card amount.

[deafbroke]

You can include the car loan in the bankruptcy filing witohut reaffirming. You can then keep making the payments and one of two things will happen. Either they will let you keep making the payments and keep the car or they will take the car and you won't owe them anything since you included the loan in the filing.

If yoy reaffirm, everything can be fine for a while but if you lose your job, or have health problems or for whatever reason cannot afford the payments anymore they can sue you for the remaining balance and you will have to pay it because you reaffirmed.

Reaffirming is never a good idea. They cannot force you to reaffirm. It is your right to decline. We have a credit union with a car loan and CC and they sent us a reaffirmation agreement. We said NO. Still have the car.

DB

[Summerbreeze]

Thanks deadbroke, I will keep that in mind.
I see your last day for objection is a lucky number here in Vegas "711" good luck to you my 341 meeting is 8/4.

[Nodebtnow]

I was discharged in May 2008. I didn't sign a reaffirmation agreement with USAA bank for the vehicle and it was included in the bankruptcy.I have never been late on a payment however, we have an SUV that we have some negative equity in and it's over 5yrs old. The wife and I are considering buying a new SUV later this fall. Can we just turn in the vehicle to the bank with out any more damage on our credit report or them coming afetr us. We don't really want to trade this in and have tem put negative equity on our new loan. Any help??