Chapter 7 reaffirmation question

[ClippedWings]

I have a car that I purchased new in 2008, not quite long enough ago to be eligible for cram down. The car has depreciated *very* quickly; I bought it new for 46k, and it appraises now (full retail value, not trade it) at 29k.

I am four months behind on this loan. When I call and talk to the loan company, all they'll give me is, "get it current, or we'll repo it". No other discussions at all.

So now I'm faced with either turning the car in, redeeming, or reaffirmation. When I initially talked to them about reaffirmation, they said some smart remark about, "Yeah, we'll just repo it right after you reaffirm it if you don't immediately catch up on your payments." I asked them if they would agree to something in writing about giving me X amount of time to catch up before they repo'd, and they laughed. Class act, this bank.

Since my case was just filed yesterday, is this whole discussion taking place out of turn? Should I call them and discuss reaffirmation now, or wait until the 341 meeting? Also, how can I go about finding out the actual redemption amount? Is this some dollar value that the creditor assigns to the car, and then is taken at face value by the court? I really need to find out the "redemption amount" (for lack of a better term) so i can find out about refinancing, either through a 722 program, or my credit union (which I'm keeping a good report with; I'm re-affirming the loan and credit card i have with them).

I would really like to reaffirm the loan with some sort of attachment that gives me a certain amount of time to bring the loan current, but I better explore all options. Honestly, I'm hoping that they'll tack half of the delinquent amount to the back side of the loan, then give me six months to bring the rest current, but that's probably not realistic.

[OhioFiler]

How much do you owe on the car?

[ClippedWings]

How much do you owe on the car?

$44k and change.

[mom2three09]

You owe $44K and it's only worth $29K.... that would be an easy one for me... let them have the car back .

[ClippedWings]

You owe $44K and it's only worth $29K.... that would be an easy one for me... let them have the car back .

Actually, that's why I really would like to do a "redemption", which is based on giving the creditor current market value for the car. Finding out exactly what the creditor will *take* as "current market value" of the car to sign off the lien to the new lender is the hard part.

"Redemption" is a great option for those of us that don't qualify for "cram down", because we haven't had the car loan long enough to qualify for cram down.

We've kinda gone off topic a bit... any help on the original questions?

[Calthius]

I thought Cram down only applies to Chp 13? If you decide to reaffirm ask them to put some wording in there that will bring the loan current and roll the unpaid interest to the end of the loan.

[OhioFiler]

Actually, that's why I really would like to do a "redemption", which is based on giving the creditor current market value for the car. Finding out exactly what the creditor will *take* as "current market value" of the car to sign off the lien to the new lender is the hard part.

"Redemption" is a great option for those of us that don't qualify for "cram down", because we haven't had the car loan long enough to qualify for cram down.

We've kinda gone off topic a bit... any help on the original questions?

If you can get them to agree to this you may want to reaffirm. Frankly, if the car lost $17,000 in value in 1 year I don't think I'd want to keep it anyway.

[ClippedWings]

I thought Cram down only applies to Chp 13? If you decide to reaffirm ask them to put some wording in there that will bring the loan current and roll the unpaid interest to the end of the loan.

Yes, that is true. The Redemption deal is what I want to do, rather than reaffirmation. The lender's whole attitude about repo'ing the car right after reaffirmation really lightens the guilt I've been feeling about this.

The main question I have is how do I get the redemption dollar figure, and who has to approve it? I can't imagine the creditor just saying "the car is worth $x", without the court having to approve it. What's to keep him from saying the car is worth a million dollars, and they won't accept anything less for redemption? Does the judge or trustee have to approve the redemption amount? Is this number typically brought to (and settled at) the 341 meeting, so I'll have some time to arrange for the financing necessary for redemption?

Is there anyone around that has actually gone through the redemption process that can share their experience?

This particular car means a lot to my son (he's seven), and honestly, if it's the *only* asset we're able to keep, that will be fine by me. He said that he'll give up his bike, scooter, toys and everything else if it will help keep the car. He even said he'll go to work mowing lawns to make money to keep the car. I really would like to turn the keys over to him on his sixteenth birthday... that's why I bought the car in the first place.

[bkmaggster]

Yes, that is true. The Redemption deal is what I want to do, rather than reaffirmation. The lender's whole attitude about repo'ing the car right after reaffirmation really lightens the guilt I've been feeling about this.

The main question I have is how do I get the redemption dollar figure, and who has to approve it? I can't imagine the creditor just saying "the car is worth $x", without the court having to approve it. What's to keep him from saying the car is worth a million dollars, and they won't accept anything less for redemption? Does the judge or trustee have to approve the redemption amount? Is this number typically brought to (and settled at) the 341 meeting, so I'll have some time to arrange for the financing necessary for redemption?

Is there anyone around that has actually gone through the redemption process that can share their experience?

This particular car means a lot to my son (he's seven), and honestly, if it's the *only* asset we're able to keep, that will be fine by me. He said that he'll give up his bike, scooter, toys and everything else if it will help keep the car. He even said he'll go to work mowing lawns to make money to keep the car. I really would like to turn the keys over to him on his sixteenth birthday... that's why I bought the car in the first place.

Maybe this could be a learning experience for your son about not living above your means? Maybe that's a terrible idea, I don't know.

But, I'm just completely curious - what kind of car do you have that has a seven-year-old so entranced?

[OhioFiler]

Yes, that is true. The Redemption deal is what I want to do, rather than reaffirmation. The lender's whole attitude about repo'ing the car right after reaffirmation really lightens the guilt I've been feeling about this.

The main question I have is how do I get the redemption dollar figure, and who has to approve it? I can't imagine the creditor just saying "the car is worth $x", without the court having to approve it. What's to keep him from saying the car is worth a million dollars, and they won't accept anything less for redemption? Does the judge or trustee have to approve the redemption amount? Is this number typically brought to (and settled at) the 341 meeting, so I'll have some time to arrange for the financing necessary for redemption?

Is there anyone around that has actually gone through the redemption process that can share their experience?

This particular car means a lot to my son (he's seven), and honestly, if it's the *only* asset we're able to keep, that will be fine by me. He said that he'll give up his bike, scooter, toys and everything else if it will help keep the car. He even said he'll go to work mowing lawns to make money to keep the car. I really would like to turn the keys over to him on his sixteenth birthday... that's why I bought the car in the first place.

This paragraph troubles me. Assigning such emotional value to a car will cloud your judgment through this process. A car is simply a car. evaluate your situation from a financial perspective not an emotional one. I can guarantee you if the car is gone tomorrow your seven year old will forget about it in 2 weeks.

I also hope you're not involving your seven year old in the bk process allowing him to think he may lose his toys.

[ClippedWings]

Guys, I'm here to get information on Bankruptcy, not moral judgement and lessons in child development.

Is it possible to stay on topic, please?

[mgmadara]

I would think long and hard about reaffirming a loan and a credit card so you can keep a good rapport with your credit union. It's better to come out of a bankruptcy with a true fresh start and you aren't going to get that if you reaffirm a loan, a credit card, and try to keep a car that you are 15K upside down on. This will be your only shot at a fresh start for many years to come so use it wisely or you will find yourself in the same situation in a few years with no way out. It's hard, but you have to try and leave your emotions out of the decision making process.

[coffee]

You may be able to look into a 722 redemption loan. US bank does it. Not sure what the requirements are. Talk to your lawyer about all this, they will be able to direct you best.

I definately would not reaffirm.

If you were current now and could afford the loan then they would reaffirm the loan no problems. They are not going to work with you until you pay the 4 months you are behind.

Just remember that if you reaffirm the loan and for whatever reason get behind again they can and will repo the car and stick you with a VERY hefty bill after they auction off the car. You have to pay the difference to the lender between 44k and what they sold it for. If it's worth $29k now you may be looking at owing them 20k or more if it gets repoed after bk is discharged.

Honestly you can buy another dream car later. I understand not wanting to disappoint your son. But..Your son is only 7 he has 9 years before he drives. Save your money in a special dream car fund that he can help and add to and set a goal for yourselves. It would be a wonderful learning expirience for him. A lot of satisfaction knowing he helped buy the dream car.

[ClippedWings]

I would think long and hard about reaffirming a loan and a credit card so you can keep a good rapport with your credit union. It's better to come out of a bankruptcy with a true fresh start and you aren't going to get that if you reaffirm a loan, a credit card, and try to keep a car that you are 15K upside down on. This will be your only shot at a fresh start for many years to come so use it wisely or you will find yourself in the same situation in a few years with no way out. It's hard, but you have to try and leave your emotions out of the decision making process.

You may be able to look into a 722 redemption loan. US bank does it. Not sure what the requirements are. Talk to your lawyer about all this, they will be able to direct you best.

I definately would not reaffirm.

If you were current now and could afford the loan then they would reaffirm the loan no problems. They are not going to work with you until you pay the 4 months you are behind.

Just remember that if you reaffirm the loan and for whatever reason get behind again they can and will repo the car and stick you with a VERY hefty bill after they auction off the car. You have to pay the difference to the lender between 44k and what they sold it for. If it's worth $29k now you may be looking at owing them 20k or more if it gets repoed after bk is discharged.

Honestly you can buy another dream car later. I understand not wanting to disappoint your son. But..Your son is only 7 he has 9 years before he drives. Save your money in a special dream car fund that he can help and add to and set a goal for yourselves. It would be a wonderful learning expirience for him. A lot of satisfaction knowing he helped buy the dream car.

Very good points, thanks everyone. The credit union we are reaffirming with is just a small credit card and a one-year-til-paid-off car loan on a six year old SUV that will end up being our only car if we don't reaffirm the "other car". I talked to the credit union branch manager about all this, and what she said was truly shocking.. she said that as long as we were honest with her about what was happening and we didn't have any debts we had with them discharged, they would *always* give us credit as if our credit score was perfect. I guess I shouldn't be surprised; that's the service we've always received from them. last October when I had to stop working because of a medical problem, I told them what was going on, and they never asked any questions, never called, never raised an interest rate, and allowed us to get *very* behind on our debts with them. Very unusual service in today's economy.

We (myself and my family) are very lucky. Last October, I was diagnosed with a very severe medical problem that caused me to miss work from then until now. In June, I had surgery, with about a 50/50 chance as to whether or not I'd recover enough to go back to work. I have made a 90% recovery, which is allowing me to start back to work today.

We are losing our house, and having to do a Chapter 7, but we are fortunate that I have (most) of my health back, and an employer that has stood behind me the entire way.

We received small amounts of benefits during this time, and anything that wasn't necessary to keep the lights on and food on the table went to the medical bills. They were the priority; they put me back together in pretty decent working order, so they got paid first. I feel guilty about having *any* debts discharged, but at least none of the medical bills will be on the creditor's list; they all got paid back in full.

A house, a car, and a few other assets are a small price to pay to have your health back.

[OhioFiler]

Guys, I'm here to get information on Bankruptcy, not moral judgement and lessons in child development.

Is it possible to stay on topic, please?

I didn't offer moral judgment or child development advice. I could not care less what anyone on here's morals are, child raising skills are based upon or developmental issues are. I was trying to help you see your reaffirmation decision in a different light.

I'm done with this topic and your questions in general.

Good luck.