What is a "ride through" and how does it work?

[95kindebt]

Reaffirmation Vs. Ride through

Whats the difference and how does each one work?

[justbroke]

Reaffirmation is where your actually reaffirm or recommit to your contract. Usually ithe terms of the original contract (mortgage/note/agreement) are restated in teh reaffirmation or incorporated into the reaffirmation. Then, any new terms are added as well. This basically allows your contract/agreement to travel through the Bankruptcy untouched (as if the Bankruptcy never happened).

A ride-through is different. A ride-through occurs when you neither re-affirm nor redeem property (and that you're not surrendering) but keep the property and continue to pay (on-time). This essentially allows you to "ride-through" the Bankruptcy as if nothing happened, only something did happen. What happened was that in the background, the Bankruptcy discharged the underlying debt for that particular mortgage/note/agreement. You get to enjoy the use of the property, so long as you continue to pay. The up-side is that you can walk away at anytime. The downside is... don't even miss ONE payment.

[AngelinaCat]

Justbroke is absolutely correct, and is one of our best informed posters. But to be a little more simple, let's use the example of a car.

If you reaffirm the car loan, that means you intend to pay it no matter what. If the worse case happens and you end up having to surrender that car before it is paid off, the loan company will sell it at auction and you will be responsible for the difference between what you owed, and what it was sold for. Because you reaffirmed, that debt is not dischargeable.

In a 'ride-through' and you keep making the payments, everything is good until THAT DAY happens, and you have to surrender the vehicle. In this case, you are NOT responsible for the difference left when the vehicle is sold at auction, and you walk away after discharge.

For this reason, many posters in the past, have strongly urged against reaffirmations and going with 'ride-throughs'.

The problem with that is that many credit unions, ours being one, insist on reaffirmations, or you are kicked to the curb. 'Hub wished to keep the car, and wished to keep doing business with this CU--had been there 40+ years--and had the ability to pay; so we reaffirmed and that was that.

The proposed agreement does have to go before the judge in your banking institution's district. They do ask if you have the ability to pay (we did) or will it pose a hardship. Those questions will determine whether or not you are approved.

Our experience was with a CU. Banks can be different. Some of the other posters will have to address that.

[SocalBroke]

I'm sure this has been answered in other threads but I'm not sure I ever found the definitive answer:

In regards to a ride-through, do I understand correctly that you can walk away, even after discharge....

For example. I still have about 2 years on my car payment. My chapter 7, God willing, will be discharged in approx. 60 days (knock on wood, fingers crossed and any other superstition that may help). If I don't reaffirm, and my car decides to go belly up say in a year, would I still be able to walk away?

Also, can you still ride thru even if you stated you plan on re-affirming on your court documents?

Sorry, I'm sure these are newbie questions but would like to see it in black and white.

[justbroke]

n regards to a ride-through, do I understand correctly that you can walk away, even after discharge....

Yes, as Mrs. 'Cat wrote... you do so without them coming after you for any deficiency (if there are any).

For example. I still have about 2 years on my car payment. My chapter 7, God willing, will be discharged in approx. 60 days (knock on wood, fingers crossed and any other superstition that may help). If I don't reaffirm, and my car decides to go belly up say in a year, would I still be able to walk away?

Yep, just walk away. Have them come get it. You're done!

Also, can you still ride thru even if you stated you plan on re-affirming on your court documents?

Yes... so long as you did not actually sign the re-affirmation and file it with the Court.

[SocalBroke]

ok, one last incredibly obvious question:

the reaffirmation is NOT the same as the Chapter 7 statement of intent, correct? I did sign that when I filed but that is not the same thing correct?

On a personal note, just wanted to say thanks justbroke, almost everyone on this board is helpful but your answers always seem clear, concise and never condescending. It is truly appreciated by newbies such as I who are nervous enough about filing and don't want to feel stupid by getting a snarky answer to a question that may or may not deserve one.

[AngelinaCat]

Hi SocalBroke. I do not remember signing an 'intent statement' in our paperwork. Perhaps we did. I do know that we signed some paperwork that our attorney's assistant downloaded from somewhere and sent back to somewhere else. (That is how dumb our attorney left us)--oh sign this, it will be okay.

No it wasn't. Our CU faxed reaffirmation papers to us which we then had to sign before a Notary, and then mail off to Dayton, Ohio. That is where our CU is located.

We then spent an almost two week period of earnest fingernail-biting, and transactions with our account being bounced, before we got the okay that the reaffirmation had been approved.

Good luck. I hope this helps.

[justbroke]

On a personal note, just wanted to say thanks ... but your answers always seem clear, concise...

Concise. Right. Hey, that answer was concise. Oh no, now I'm blabbing again, but thanks!

[justbroke]

the reaffirmation is NOT the same as the Chapter 7 statement of intent, correct? I did sign that when I filed but that is not the same thing correct?

They are related but not the same. The "Statement of Intentions" is a form which gives creditors notice as to what your disposition of property is going to be. On that Schedule, you indicate whether you will reaffirm, redeem or surrender property.

Actually receiving a reaffirmation agreement, completing and signing it (probably notarized too, as Mrs. 'Cat writes), and returning it to the creditor's attorney, is a separate and distinct action.

[SocalBroke]

Thanks to both of you and sorry if I hijacked the thread. I think it's kinda funny now that I have been trying so hard to get my loan company to reaffirm my car loan when it definitely appears to work to my advantage just 'letting it ride'.

[AngelinaCat]

Hi SC You helped to answer some of the OP's questions, by asking questions and getting our responses so do not apologize for 'hijacking the thread'.

In my opinion, you did not. Instead, you voiced concerns that the OP may have had in mind to ask, or never even thought of, and by your questions, you helped her and others to come.

Thank you and Good luck with your situation~~~

[shabam]

The one thing that people need to keep in mind when they don't reaffirm is that the creditor has the right (at will) to take the car. While certain states have their own protection against this, most do not. This is a risk. Yes that means, regardless of whether you are making payments on time or not.

People probably should ask themselves whether the risk is worth it to them. There are also certain creditors and CU that will take the car back regardless, unless a reaffirm is signed.

[lrprn]

Hypothetical situation #1: You ride through a vehicle and want to sell it but the loan is not yet paid off. Obviously, if the vehicle's still upside down, you'd not bother to sell it. For this example, let's suppose the car has more value than the remaining loan balance. Can you legally sell the thing if you pay it off with part of the proceeds?

After your bankruptcy is discharged and closed, you can do anything you want with any asset you still have in your possession. If your car's value is higher than the loan and you sell it for its street value, you pay off the remaining car loan and pocket the rest.

Hypothetical situation #2: You ride through a vehicle and do pay the loan off and then want to sell it. If the loan and asset have become separate liability issues for the buyer, when and how does the owner obtain a clear title once the loan's paid off?

Once your loan is paid off, the lender has no grounds to keep the title. You should receive it as soon as the loan is confirmed paid in full. Then you can sell the car with a clear title in hand.

Hypothetical situation #3: You ride through your home (only a single mortgage for this example) and later want to sell it. By the time you want to sell it, the house is no longer upside down but the loan is not fully paid off either.

If you sell your home for its market value and are able to pay off the mortgage in full, then you are fine. It's when you sell the home but *can't* pay off the loan that's it's great to NOT have a reaffirmation agreement. In this situation, you get to walk away from whatever loan shortfall is left after the home sale not owing anything.

[floridian]

not to be confused with a "drive by"..

[DustinLH00]

Is it also worth noting that if you do a ride through and not a reaffirmation, the debt stops reporting to your credit report? This was a deciding factor for me as well. Just thought I would mention it.