Cancel Auto reaffirmation after Discharge without affecting Chapter 7?

[tlcabk]

We signed auto reaffirmation based on attorney (Paralegal) advise, and it says something to the affect of us being able to cancel the agreement before the Discharge or 60 days from the day we signed whichever is greater. We did not want to sign as our jobs are not very secure and if I lose mine there is NO way we could afford to keep car.

We filed Ch 7 but were extreme border line to a 13. Our paralegal (we can never reach out atty) said in SC you have to sign it? After reading this board I think we were misguided.

If we cancel reaffirmation after discharge and give the car back can it affect our discharge?

If we Cancel before discharge does it affect our chapter 7? Can it affect cahpter 7 if finance co decides to not allow ride through? We need the car but are afraid of the risk involved in reaffirmation.

[StartingOver08]

You can RESCIND your reaffirmation as long as you do it BEFORE DISCHARGE. Because you have already signed it the attorney will need to file the appropriate paperwork. Don't let the paralegal stand in the way of getting the reaffirmation agreement rescinded, because if it is not done timely, you are stuck with the reaffirmation and the consequences if you can't repay the loan.

C. Debtor’s Right to Rescind

As was the case under the Old Bankruptcy Code, the New Bankruptcy Code provides that a debtor may rescind its reaffirmation agreement the later of (i) sixty (60) days from the date such reaffirmation agreement has been filed with the court or (ii) the date the court issues the discharge order

BTW, if you have already had your 341, the cancelation of the reaffirmation agreement will not affect your BK.

[BobMango]

Hey StartingOver08, why do you say you have to rescind before discharge? The law clearly states that you have 60 days from signing or discharge, whichever is greater, no mention that it must be before discharge. That means if your reaffirmation was signed one week before discharge you still have 53 days in which you can rescind.

[BobMango]

To the OP, my reaffirmation has a section pertaining to rescision and it clearly states that I have 60 days from when the agreement was filed with the court. It also states that I have to notify the creditor that I am rescinding.

My advice would be to wait until after discharge. This is not one of the conditions on which a discharge can be revoked.

[StartingOver08]

Thank you Bob...I'm asleep at the board here!

[Dst1]

You guys didn't answer the OP's other question. Could rescinding the reaffirmation turn the BK 7 into a 13?

[BobMango]

You guys didn't answer the OP's other question. Could rescinding the reaffirmation turn the BK 7 into a 13?

My advice was to wait until the discharge, then cancel the reaffirmation. That way the Chapter 7 is not in jeopardy. There are only a few reasons the discharge can be dismissed, and canceling a reaffirmation agreement is not one of them.

[tlcabk]

Thank you for the repsonse. We are at day 70 since 341. I just checked Pacer again and still no discharge, but our 60 days will be up soon for the reaffirmation. I think it is up on Monday so I think I'm out of luck! What are the odds the finance company would allow a ride thrugh if I cancel a reaffirmation? Suzuki Finance? Any thoughts?

[BobMango]

Thank you for the repsonse. We are at day 70 since 341. I just checked Pacer again and still no discharge, but our 60 days will be up soon for the reaffirmation. I think it is up on Monday so I think I'm out of luck! What are the odds the finance company would allow a ride thrugh if I cancel a reaffirmation? Suzuki Finance? Any thoughts?

The law states that you have either 60 days after the date you filed the reaffirmation with the court or discharge, whichever is later. Do you know the date your reaffirmation was filed with the court? Check PACER for this. My lawyer got the reaffirmation at my 341 but it wasn't filed until 7 days later.

In any case you will not jeopardize your Chapter 7 by canceling the reaffirmation before discharge. If it has not been discharged you can still rescind the reaffirmation, call and see if you can get a fax number to get a letter to them to notify them of your decision.

I don't have any experience with Suzuki Finance, but in most cases and jurisdictions the ride-thru option is still viable after you cancel a reaffirmation. The wrinkle would come in if the reaffirmation changed the terms or forgave prior late payments, etc. In that case you would have to bring it current under the previous terms to keep it.

[Michigan1951]

Okay, to understand this clearly -Example-

If I signed a reaff and it was posted on Pacer, on 11/13, but didn't get a discharge until 1/25/2010 (and should have been on 12/15/2009)........where do I count the 60 days from? Is it from 1/25/2010?

And, if the lender won't do a ridethru (and we are current and not behind and no special provisions made to the original contract), can we just say come and get it, if they get upset that we are notifying to rescind?

Can they take a vehicle that you have not gotten behind on?

Is the trustee notified or involved at all here? Case is not closed yet either......Does that make a difference at all?

Options are golden for sure!!

[Dst1]

Can they take a vehicle that you have not gotten behind on?

Yes, if there is no affirmation agreement in place; there was a case decided about just this issue a few weeks ago. Remember there is no such thing as a "ride through" anymore.

[BobMango]

Okay, to understand this clearly -Example-

If I signed a reaff and it was posted on Pacer, on 11/13, but didn't get a discharge until 1/25/2010 (and should have been on 12/15/2009)........where do I count the 60 days from? Is it from 1/25/2010?

In this case the 60 days would have started on 11/13 (or likely a day or so before.) So using the 60 days you could have canceled anytime before 1/13, give or take a day. Since your discharge was not granted until after that 60 day period expired, you actually could have canceled anytime before 1/25 since it was later than the 60 day time period.

And, if the lender won't do a ridethru (and we are current and not behind and no special provisions made to the original contract), can we just say come and get it, if they get upset that we are notifying to rescind?

Yes, if you are within the time frame allowed for canceling.

Can they take a vehicle that you have not gotten behind on?

Not if you signed a reaffirmation that was approved by your attorney (if you had one) or the court (if you filed pro se). They may be able to if there is no reaffirmation agreement, depends on the lender and the district.

Is the trustee notified or involved at all here? Case is not closed yet either......Does that make a difference at all?

Options are golden for sure!!

Case closing does not matter. There is no requirement to notify the trustee (local rules may be different), but you must notify the creditor. I'd also talk to my attorney if you had one. If you notify the creditor that you are rescinding the agreement and surrendering the property, you have no further financial obligation for that debt.

Here is the language from my reaffirmation. (Emphasis mine)

From B240A, Reaffirmation Documents, Section V. Disclosure Statement and Instructions to Debtor(s)

Can you cancel the agreement? You may rescind (cancel) your reaffirmation agreement at any time before the bankruptcy court enters your discharge, or during the 60-day period that begins on the date your reaffirmation agreement is filed with the court, whichever occurs later. To rescind (cancel) your reaffirmation agreement, you must notify the creditor that your reaffirmation agreement is rescinded (or canceled). Remember that you can rescind the agreement, even if the court approves it, as long as you rescind within the time allowed.

[lrprn]

Yes, if there is no affirmation agreement in place; there was a case decided about just this issue a few weeks ago. Remember there is no such thing as a "ride through" anymore.

Be careful, Dst1 - not so fast. There are a few states - Kansas for one - that have state laws that protect debtors from having any asset from being repossessed or foreclosed if the payments are on time.

In these states, the new case law in one bk district may not matter - state law is likely to take precedence, especially if the state the debtor lives in is not in the bk district that made the recent ruling.

To find out if your state is one that has laws on the books that prevent repossession or foreclosure of assets with on-time payments, ask your lawyer.

[Michigan1951]

Thank you BobMango

in this case the 60 days would have started on 11/13 (or likely a day or so before.) so using the 60 days you could have canceled anytime before 1/13, give or take a day. Since your discharge was not granted until after that 60 day period expired, you actually could have canceled anytime before 1/25 since it was later than the 60 day time period.



Yes, if you are within the time frame allowed for canceling.



Not if you signed a reaffirmation that was approved by your attorney (if you had one) or the court (if you filed pro se). They may be able to if there is no reaffirmation agreement, depends on the lender and the district.



Case closing does not matter. There is no requirement to notify the trustee (local rules may be different), but you must notify the creditor. I'd also talk to my attorney if you had one. If you notify the creditor that you are rescinding the agreement and surrendering the property, you have no further financial obligation for that debt.

Here is the language from my reaffirmation. (emphasis mine)

Okay!! I went to the reaff at Pacer and read the fine print. I figured the dates out, and realized that 1/25/10 was the cutoff. Problem was that our lawyer didn't point out that we still had that option to rescind since the discharge was taking longer. I would have liked to have known that it was still the option. We are still okay with the signing of the reaffs though. I appreciate your help in understanding all this even if it was after the fact for us.

[tlcabk]

341 was on 12/4 (No asset / No Dist chapter 7) Still no discharge on Pacer at day 73 ? ?
Reaffirmation signed on 1/15/2010
Nothing show's on Pacer for Reaffirmation (What's up with this? I guess I need to call my atty)
I live in SC.

Reaff agreement states: "I can rescind at anytime before the court enters the disharge or before the expiration of the 60 day period that begins the day the reaffirmation agreement is filed with the courts, whichever is greater."

Maybe this is why the atty hasn't filed it yet? They want to give me more time after discharge? But could this be what is delaying my discharge?

When I asked the paralegal (can never get to the atty) she said it could take 6 months to get a discharge? The atty when we left our 341 (with a UST and reg trustee who neither were interested in us) told us we could move on with our lives, it was a done deal? He even told my husband he could go move on to try and find a better paying job (if he could).