Reaffirm or not to reaffirm, that is the ?

[Calamity]

We signed the paperwork today and our bankruptcy will be filed the first of next week. Hasn't been a great day. I feel deflated.

One things is really bothering me. We asked to reaffirm loan on a van. I put down a large lump of cash when we bought it (traded in a car I owned free and clear) and we owe much less than it's value. We also have a loan through our credit union on another vehicle. We have unsecured debt through them also. Our attorney advised us over and over again not to reaffirm this loan because of credit unions and their cross collateral clauses. Thus, we choose to surrender it.

I am worried about how we are going to get by with one vehicle. I would prefer to keep the second vehicle and not surrender it, but I refuse to take back on unsecured debt to do it. I went through my paperwork on the unsecured loan, we took out 4 years ago, and I can not find anything on the loan agreement about cross collateral. It specifically says it's an unsecured loan. I looked at the loan agreement on our second vehicle, and can find nothing on it either.

Now I feel like I may have just chosen to surrender a vehicle I may have not needed to. :sigh: This is so hard. What would happen if I called up our attorney, asked her to change the paperwork to state I would like to reaffirm with this credit union and wait and see what the reafirmation states, and if I don't like it (such as they lumped the debt together), don't sign the reaffirmation? Is that possible? Will it then work as a surrender? I am not sure what to do.

[LuciluS]

Make sure you do not have any monies in a checking and/or savings account with the CU. Most Credit Unions are notorious for Cross-Collateralization of Debts.

Copy those two documents you stated in your post and email or drop in at your Attorney's office. Yes, if you want to, you can state you want to Reaffirm the loan.

Here is a link you might want to read. I am copying only the part concerning Reaffirming; however, you might want to read the entire link. Note what I underlined.

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter7.html

http://www.bkforum.com/showthread.php?t=39908

What I stated follows:

"I did find the following. Content copying of the below Article is not allowed. So here is the URL:

http://www.usdoj.gov/ust/eo/ust_org/...fo_english.pdf

On Page Two it specifically states that Reaffirmation Agreements are not required by bankruptcy law or by any other law."

Luci

[tkharvey]

Just my experience, credit unions can and will cross collateralize and take your cars! We experienced it first hand last month. We had two vehicles THAT WE WERE CURRENT ON, but a Visa that we were including in our Chapter 13 (haven't filed yet). We were about four months dlinquent on Visa (lawyer said to stop paying all cc's once we decided to file bk....waiting to file bk since we are in the process of applying for a loan mod). Anyway, they came and repo'd cars in the middle of the night. We actuall thought they were stolen at first since we knew we hadn't missed any payments. come to find out the credit union excercised it's right to "cross collateralize". Becareful of credit unions.

[chad9162]

Just my experience, credit unions can and will cross collateralize and take your cars! We experienced it first hand last month. We had two vehicles THAT WE WERE CURRENT ON, but a Visa that we were including in our Chapter 13 (haven't filed yet). We were about four months dlinquent on Visa (lawyer said to stop paying all cc's once we decided to file bk....waiting to file bk since we are in the process of applying for a loan mod). Anyway, they came and repo'd cars in the middle of the night. We actuall thought they were stolen at first since we knew we hadn't missed any payments. come to find out the credit union excercised it's right to "cross collateralize". Becareful of credit unions.

According to my attorney, "cross collateralization" is something your bank does before you file. Once you file the automatic stay protects you. At this point each loan is now an individual loan and you can choose to reaffirm or not.

My credit union (NFCU) said they would reaffirm my auto loan. I called them after we filed and asked them. I was a bit worried about this but at the same time had no problem giving up the vehicle, it's just a vehicle. Ironically I googled them and found the actually promote reaffirmation. I guess my concern was similar to you in that it would be an "all" or nothing. In reality I think it comes to down to numbers. They rather get something than nothing.

Interestingly my credit union has been "fair." They called a lot but once I told them I was filing they stopped for the most part. I feel bad because they were a really good credit union.

If you filed call your bank and talk to the bk people. My attorney is not representing me in reaffirmations and actually advised against it. But also stated that they could repo (although unlikely) on a ride through (continued to pay but don't reaffirm.

[Calamity]

Thank you for all the responses, but my question was not answered. All I want to know is if I can state on my BK paperwork that I would like to reaffirm, and then look at the offer the credit union comes with and decide then whether to actually do it or not?

[StartingOver08]

Thank you for all the responses, but my question was not answered. All I want to know is if I can state on my BK paperwork that I would like to reaffirm, and then look at the offer the credit union comes with and decide then whether to actually do it or not?

Yes. You can do this. The first thing you do is select reaffirmation on your Statement of Intentions. When the reaffirmation comes in, you can check to see if they have added some or all of the unsecured debt to your vehicle loan. If they have, you can usually negotiate the unsecured portion off the debt and specifically add language to remove the cross collateralization from your loans with the CU (that is what I did and my CU agreed and put it in writing with a new reaffirmation agreement). You sign the agreement when it meets your needs then have your attorney sign the reaffirmation and file it with the court.

If you can not get the CU to remove the unsecured portion (if any), then you can change your mind and surrender the vehicle as long as it is before discharge. All you have to do is refile the Statement of Intentions showing you are now surrendering the vehicle rather than reaffirming.

My CU was very cooperative. YMMV

[lostand]

We had a van loan and another loan threw our CU we had never been late on the payment they took the van we wanted to keep it but they would not let us

[BnkrptcyLwyr]

See if you can refinance the vehicle through another lender. If you owe much less on it that what it's worth, it might be easier than you think. The reason I say to refinance is because the credit union may not reaffirm unless you reaffirm all of the debt you owe to them.

Remove all cash from any accounts with the credit union before filing. They can put an administrative freeze on the accounts and exercise any setoff rights against the accounts.

Make sure that you will be able to exempt the cash on hand you will have after you empty the accounts.

[chad9162]

The disclosures also require the debtor to sign and file a statement of his or her current income and expenses which shows that the balance of income paying expenses is sufficient to pay the reaffirmed debt. If the balance is not enough to pay the debt to be reaffirmed, there is a presumption of undue hardship, and the court may decide not to approve the reaffirmation agreement. Unless the debtor is represented by an attorney, the bankruptcy judge must approve the reaffirmation agreement.

Am I understanding this correctly? Even if there is an undue hardship, the court "must" approve the reaffirmation because I am not represented by an attorney????

[WillinVT]

Am I understanding this correctly? Even if there is an undue hardship, the court "must" approve the reaffirmation because I am not represented by an attorney????

I am curious about this also.

[LuciluS]

Am I understanding this correctly? Even if there is an undue hardship, the court "must" approve the reaffirmation because I am not represented by an attorney????

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Yes....The Bankruptcy Code requires the Court to sign the Reaffirmation if not represented by an Attorney. Don't know if this part of the Bankruptcy Code is strictly enforced.

Good Question! Bump for those who have done such.

Luci