Reaffirmation of Debt

[Traveler14]

[chad9162]

Yes, you pay based on the original terms....the whole de facto thing confused me a bit. The next post clarifies that portion...

[HHM]

Actually, No.

But the answer really depends on the context.

If you are asking, "by continuing to make payments even though I did not reaffirm, do I make myself responsible for the debt after discharge"...the answer is no.

If you are asking "by continuing to make payments without a reaffirmation agreement, am I protected from a deficiency balance if I later surrender the asset (car loan situation), the answer is yes.

[JoeBankrupt33]

I second HHM. You do not become legally responsible for the debt if you continue to make payments. In order to become legally binding, you must sign a reaffirmation agreement.

[danaf]

HHM's answer is perfect. And - DO NOT sign any reaffs - esp. in this economy!

[chad9162]

But if you don't reaffirm there is a risk of repo correct? Also does anyone know if a credit union can use cross collateralzation to screw me later. Example....Continue to pay my auto loan under original terms. Once paid off could they keep my title and argue cross collateralzation.

[danaf]

With all the cars on the lots you think there is a risk of repo if you continue to pay? Not so. The bank want their money, not cars they will not be able to sell.

In terms of paying off - and cross collateralization....I don't think they'd be able to do that but I'm not sure. I highly doubt it since the other debt would have been discharged. In fact, I would say nay and if that were to happen, that would be a nifty lawsuit against them.

[chad9162]

With all the cars on the lots you think there is a risk of repo if you continue to pay? Not so. The bank want their money, not cars they will not be able to sell.

In terms of paying off - and cross collateralization....I don't think they'd be able to do that but I'm not sure. I highly doubt it since the other debt would have been discharged. In fact, I would say nay and if that were to happen, that would be a nifty lawsuit against them.

Thanks I'm hoping they won't be vindictive.

[Traveler14]

Thank you all.

I can understand some confusion because the question alludes to such an unusual scenario. What possible reason would someone have for voluntarily continuing to make payments on an unsecured debt after the debt had been legally discharged?

Assume it is a personal situation where the debtor listed the debt because his or her attorney advised that all debts must be listed and he or she complied. However, because of the personal relationship between the debtor and the creditor, the debtor feels honor bound to attempt to eventually repay the loan in full.

However, the worry is that the debtor might come into a financial situation where such is simply no longer possible. As Shakespeare said, "...as the loan oft times losses the money and the friend."

If after a period of time the debtor can simply no longer continue to make the payments, could the creditor (or his or her heir in the event he or she became deceased) sue under the argument that the debtor having continued to make the payments constitutes a legally binding reaffirmation of the debt even though nothing to that effect had been put into writing?

[StartingOver08]

When you get your discharge, it is violation for the creditor to continue collection activity, but you can make voluntary payments if you want to do so.

You are allowed to make voluntary payments. Voluntary payments DO NOT constitute a new agreement nor do they constitute a 'defacto reaffirmation'. Take a look at this case here for a good explanation: http://www.ilsb.uscourts.gov/opinion...n(93-3061).pdf

Voluntary payments are allowed at your schedule, your timeframe and you can quit when necessary.

[Traveler14]

Dear Starting Over:

Thank you so very much for that clear and salient answer to my question!

When I first starting reading the court opinion you kindly referenced and linked to, I thought it wasn't really relevant to my question because my question positions a situation where the debtor genuinely resumes payments on a voluntary and fully aware basis. However, the opinion goes on to state:

"Section 524 (f) thus allows a debtor to repay a debt after bankruptcy even though a reaffirmation agreement is not obtained. In this way debtors may repay debts as they choose without being legally obligated in the event they later become unable to fulfill their intention." [Emphasis added]

So not only is your answer clear and concise, so is your referenced legal opinion.

Being new here, I don't know if you are an attorney, or simply someone well-versed in legal matters (for whatever reasons). In either case, you are a genuine asset to this forum, and I'm sure all, including myself, of course, appreciate your taking the time to contribute here.

Thanks so much again, and to all.

[StartingOver08]

Thank you!
Nope, not an attorney. Just one of you!

[meinnc]

Is a house considered unsecured debt?

I just filed yesterday and the house and car were listed as creditors. However, the lawyer told me that I should not reaffirm, even though I plan to keep paying both.

So, according to all I have just read on this thread, are you all saying that if I decided to stop paying for the house and car, legally nothing can happen to me on that end? In other words, I don't have a legal obligation to keep paying for those things?

[StartingOver08]

A house is considered SECURED debt.

When you file ALL debt gets listed: secured, unsecured and priority (taxes) debt.
Once you are discharged you are legally free of the discharged debt.

There are certain exceptions, notably Student Loans and a couple of other very unusual things - like debt due to fraud.

[jedimom]