reaffirming loans

[TEW]

[MomIcantFindmy]

In our case we wanted to reaffirm out car loans as opposed to a ride through. We were concerned that if we did a ride through we may, as others have, have a hard time getting the title.

[Tabbygirl]

Personally, it's strategic...I have an auto loan which isn't really upside down (I owe what the truck is worth), is at a pretty good interest rate (much better than I can get post-ch.7) and it's with a credit union I somewhat want to preserve a relationship with. I could care less if they like me or not; I just know that I would have to replace the auto with another.

I would do a ride through, but in Texas, that is no longer allowed. The options are surrender, redeem or reaffirm. I don't want to surrender the vehicle and I don't have the lump sum funds to redeem (nor do I believe it would be prudent to finance a slightly lesser amount at a huge interest rate).

I believe it's a personal decision--in my case, I thought it out and analyzed the pros and cons. In my situation, reaffirmation made sense with this vehicle but not with the leased auto.

Same thing with houses; some people feel strongly about their home and feel the benefits of keeping it outweigh the negatives, even if they're upside down. They may want the security of maintaining their residence rather than deal with the unknown of renting. In contrast, your situation may be different and not feel that need for security or have other options.

There may not be a logical answer to your question, honestly, since people have different priorities and circumstances.

[TEW]

Personally, it's strategic...I have an auto loan which isn't really upside down (I owe what the truck is worth), is at a pretty good interest rate (much better than I can get post-ch.7) and it's with a credit union I somewhat want to preserve a relationship with. I could care less if they like me or not; I just know that I would have to replace the auto with another.

I would do a ride through, but in Texas, that is no longer allowed. The options are surrender, redeem or reaffirm. I don't want to surrender the vehicle and I don't have the lump sum funds to redeem (nor do I believe it would be prudent to finance a slightly lesser amount at a huge interest rate).

I believe it's a personal decision--in my case, I thought it out and analyzed the pros and cons. In my situation, reaffirmation made sense with this vehicle but not with the leased auto.

Same thing with houses; some people feel strongly about their home and feel the benefits of keeping it outweigh the negatives, even if they're upside down. They may want the security of maintaining their residence rather than deal with the unknown of renting. In contrast, your situation may be different and not feel that need for security or have other options.

There may not be a logical answer to your question, honestly, since people have different priorities and circumstances.

[PoorGrammyinBK7]

Personally, it's strategic...I have an auto loan which isn't really upside down (I owe what the truck is worth), is at a pretty good interest rate (much better than I can get post-ch.7) and it's with a credit union I somewhat want to preserve a relationship with. I could care less if they like me or not; I just know that I would have to replace the auto with another.

I would do a ride through, but in Texas, that is no longer allowed. The options are surrender, redeem or reaffirm. I don't want to surrender the vehicle and I don't have the lump sum funds to redeem (nor do I believe it would be prudent to finance a slightly lesser amount at a huge interest rate).

I believe it's a personal decision--in my case, I thought it out and analyzed the pros and cons. In my situation, reaffirmation made sense with this vehicle but not with the leased auto.

Same thing with houses; some people feel strongly about their home and feel the benefits of keeping it outweigh the negatives, even if they're upside down. They may want the security of maintaining their residence rather than deal with the unknown of renting. In contrast, your situation may be different and not feel that need for security or have other options.

There may not be a logical answer to your question, honestly, since people have different priorities and circumstances.

I am in a similar situation. On one car, we have about 16 months left, rate is 5%. On the other, we have about 3.5 years left and it is at 6.65%. Payments are reasonable, so I think we would rather reaffirm so they can't take the vehicles. We owe just a bit less than what they are worth. My problem is they are with the credit union where we have the 1st mtg and I don't want to reaffirm that. I am afraid they are gonna say "all or none". We'll see, I guess.

[TEW]

Not reaffirming isn’t going to change anything on those loans except to leave you in control of you finances.
I am sure the CU/BANK does not like to have you holding the cards but that’s to bad.
If you are just starting to recover from BK I think that’s the worst time to give away the control the court gave you.
I don’t know about you but I don’t have anything in my emergence fund yet. Just suppose I reaffirm the loan on my car. It’s out of warranty and the transmission goes out on it. Not reaffirming leaves you the option of not having to come up with maybe $2500.00 or handing it over. I know what I would do. And it doesn‘t involve putting 2500 into a car. It’s getting towed to the nearest bank branch.
As far as the CU I don’t think they can cross collateralize loans that have been discharged.

[momof5]

Not reaffirming isn’t going to change anything on those loans except to leave you in control of you finances.
I am sure the CU/BANK does not like to have you holding the cards but that’s to bad.
.

In our case it was either reaffirm or say goodbye to our car. No ride throughs. The Credit Union would have none of 'us holding the cards'. Period.

We chose to let them have it back after finding all this out. They were not doing me any favors.

[TEW]

In our case it was either reaffirm or say goodbye to our car. No ride throughs. The Credit Union would have none of 'us holding the cards'. Period.

We chose to let them have it back after finding all this out. They were not doing me any favors.

[PoorGrammyinBK7]

I just think the decision you make on this depends on your car, its condition, how much you have to drive it, your current payments vs possible new payment amount, your interest rate, and how many months you have left, etc.

For many people, especially if you are upside down, its probably best NOT to reaffirm.

But for some people, it may actually be best to reaffirm ... if you have some equity, a shorter term left to pay on a car whose history you know, with a LOW interest rate ... than to take a chance on a VERY high post BK interest rate and a used car you know nothing about.

It really depends on your particular situation. And ride-throughs are not permitted everywhere. I just read some case law regarding the very credit union we have our loan with NOTallowing the ride-through and the judge made the people decide to reaffirm, surrender or redeem - extending their discharge date a few days to give them time to decide.

[Mi Bankruptcy]

If you reaffirm does that not allow you to continue making payments and thus help restablish your credit if you pay after your BK. I guess I am assuming since a majority of your bills are gone it would be easier to continue to make payments. Of course, I have not even retained an atty so I could be way off base.

[b_girl]

We were firmly in the 'do not re-affirm' camp until our lawyer told us that in our state, to not re-affirm would mean we would lose the house, whether we were making payments or not. We chose to give up 4 out of 5 of our secured items (a house plus HELOC and 2 vehicles) because we absolutely could and would not re-affirm them, but we did re-affirm the second house, as my husband is not fond of renting. Make sure you check with your lawyer about what applies in your area...ride throughs happen but not everywhere it appears.

On the bright side, choosing to re-affirm our second house has left us with a smaller payment plus we owe much less on it than the first house. It is also larger and sits on one acre in the country, so we now have more house/space than we did before. Therefore, going through with the re-affirmation forced us to make a pretty good change for us.

[TEW]

If you reaffirm does that not allow you to continue making payments and thus help restablish your credit if you pay after your BK. I guess I am assuming since a majority of your bills are gone it would be easier to continue to make payments. Of course, I have not even retained an atty so I could be way off base.

Well if you keep the asset you have to keep making the payments ether way. If you do not reaffirm it will say include in BK no balance. They are suppose to update your CR but they are also not suppose to be sending me letter saying how sorry they are about my finical situation with the word this is an effort to collect a debt at the bottom. I think it a dangerous way to fix my CR.

[BKdinOhio]

Also there is the fact that some states don't allow a ride through.

[downwardspiral]

I believe another reason to reaffirm is it will show up on your credit report and help you build it back up. If you ride through it won't appear on your credit. Plus, if you don't keep your car and try to get another one it will probably be really hard.

[b_girl]

Our lawyer also noted this as an added benefit when he urged us to re-affirm our house. As for replacing a vehicle, it is hard but not impossible...we located a replacement loan and were able to get a better vehicle for less money and with less mileage. Yes, the interest rate is high right now, but in a year (or perhaps less) we will re-finance it with our bank and the payments will be much lower than what we were paying pre-BK, so not re-affirming our vehicles ended up being a very good move for us.