Ride Thru vs Reaffirm?

[Spagal]

If you have a vehicle with a note that you intend to keep what is the difference between ride thru and reaffirm?

I thought you automatically had to reaffirm if you planned to keep the vehicle?

[HakunaMatata]

A ride through permits one to continue paying on secured property without personal liability (no loan commitment). A reaffirmation recommits one to the loan (personal liability can't be discharged in BK). Ride through and reaffirmation options vary and are contingent upon lenders. Some permit ride-throughs, while others insist on reaffirmations. Uncommonly, lenders will reject both options (debtor wishes to reaffirm loan obligation and lender refuses).

[Spagal]

Note is with my credit union that I bank with. It seems unlikely then that they will ask for reaffirmation nor will they reject the options.

Thank you. I had not idea that reaffirmation was not always required.

[HakunaMatata]

You or your attorney should follow up with your CU. Oftentimes smaller lenders have more austere standards and long-term relationships don't factor into this (I reaffirmed with my CU). Regardless, you're taking necessary steps in exploring your options. If you discover a ride-through isn't a viable option, you may chose to reaffirm or find a different vehicle.

[AngelinaCat]

Note is with my credit union that I bank with. It seems unlikely then that they will ask for reaffirmation nor will they reject the options.

Thank you. I had not idea that reaffirmation was not always required.

Our CU insisted that we reaffirm our car, or else we could not remain members. My DH 'Hub, had been with this CU for more than 40 years and wished to remain with them. Also, we only had about 8-10 months more to go on the loan. We also had an overdraft protection loan that we reaffirmed too.

[aces67]

You don't always have to reaffirm but if you have a savings or checking account with this CU you definitely need to look at your options. Most of the time everything you have through a CU is cross collateral.

[Spagal]

Sorry, what does "cross collateral mean"? I am new to this.

I only have a checking account and car loan with the CU.

[BobMango]

With most credit unions, your credit card or other unsecured loans are actually secured by your vehicle or other asset accounts (checking and savings) in what is referred to as a cross collateralization clause. This means that if you fall behind on a credit card, they can take the funds from a savings account or repo your vehicle.

This can complicate the ride-through vs. reaffrimation issue when you have both credit cards and car loans with the same credit union.

In my case, I have two credit unions. One has my vehicle loan, the other has my checking and savings accounts. The only reason I reaffirmed is that the CU was willing to lower my payment by more than 200 dollars a month, but only if I reaffirmed.

[Spagal]

Interesting. Well I don't think I have a "cross collateral issue" then. I have no credit cards with them.

I got the loan with the CU from a dealer and had never banked with them before. I just opened a checking account with them since my credit cards were auto debiting my normal checking account and although I stopped that I am afraid they might dip in without my consent after I default. So I am new to banking with them for checking.

So being that the loan had nothing to do with a banking relationship it doesn't sound like cross collateralization. Either way, I am on time with the car payment and will reaffirm if needed, for the same amount. I bought an affordable car so the payments are real low already.

[StartingOver08]

Actually Spagal, what you are describing is the perfect cross collaterization issue: car loan AND checking/savings with the same CU. If you default on the car loan, the CU can take the funds in your checking and/or savings account (commonly referred to as the 'share account' in CU language) to cure the default.

BTW, it does not matter that the loan was originated with the auto dealer. The fine print is in your loan documents AND in your share agreement/deposit agreement that you signed when you opened the account with the CU.

If you are going to reaffirm the auto loan it is not an issue. I don't know how they will treat a ride through on your auto loan. You can speak to the BK dept of the CU and they will let you know your options.