adding fees or interest

[brentd]

Has anyone heard of clauses in vehicle loan docs that either increase interest rates by default (ipso facto) or add a fee if the loan is not reaffirmed?

[dakota112]

my eyes are no longer good enough to read fine print, but if they play that game, than they can have this overpriced car back.

[justbroke]

Has anyone heard of clauses in vehicle loan docs that either increase interest rates by default (ipso facto) or add a fee if the loan is not reaffirmed?

I haven't heard of it, but it is possible, and here's why.

Prior to the new Bankruptcy Abuse and Consumer Protection Act (BAPCPA) amendments of 2005, the bankruptcy law basically would void (make void ab initio) any "ipso facto" default clause in any contract that the Debtor entered pre-petition.

However, this has been reversed by BAPCPA. Specifically for automobile loans not reaffirmed, the inclusion of the "ipso facto" default clause -- and any universal default clause -- is now allowed because of the new section in 11 USC 521, specifically subsection (d).

So, buyer beware. (I will add that if you re-affirm, they couldn't do this, because you would have taken the action required by 11 USC 521(d).)

11 USC 521(d)

If the debtor fails timely to take the action specified in subsection (a)(6) of this section, or in paragraphs (1) and (2) of section 362 (h), with respect to property which a lessor or bailor owns and has leased, rented, or bailed to the debtor or as to which a creditor holds a security interest not otherwise voidable under section 522 (f), 544, 545, 547, 548, or 549, nothing in this title shall prevent or limit the operation of a provision in the underlying lease or agreement that has the effect of placing the debtor in default under such lease or agreement by reason of the occurrence, pendency, or existence of a proceeding under this title or the insolvency of the debtor. Nothing in this subsection shall be deemed to justify limiting such a provision in any other circumstance.