Reaffirmation: To Rescind or Not Rescind?

[HakunaMatata]

I reaffirmed my auto loan days before my discharge. After recently pulling one of my credit reports, I discovered my loan is reporting as IIB and is reflecting delinquencies (I've never been late...NO delinquencies unless double payments = delinquent! ). I've disputed. I've lost. I finally talked to my CU today.

Initially, I was determined to reaffirm because I desired a positive tradeline. After ending my friendship with FICO, I'm not so concerned. Viewing my credit report has spurred new thoughts.

I have a very reasonable payment on a vehicle I dislike. This pre-BK planning purchase was quick, modest, and necessary (as my former vehicle required costly repairs). I have slight negative equity. However, I need to take into consideration equity may plummet more rapidly due to SAABotage . I've tried to focus on the positives embedded within my purchase (reasonable payment, gas, insurance). The car serves its purpose (getting me to and from work). Is this worth personal liability when I have the right to opt-out?

I shared my concerns with my CU today. I questioned their stance on reaffirmations and ride-throughs. Information was inconsistent. I questioned credit reporting outlining the flaws I'd observed. I was told the loan has to report as IIB and that the delinquencies were inaccurate. I asked why the loan would be IIB if it had been reaffirmed (noting it should reflect as "pays as agreed"). I stumped the representative and she failed to offer a concise answer. Further, I inquired about a rescinded reaffirmation. Initially I was told repossession wouldn't occur if I remained current. SCORE! I have my answer. Not so fast. I received an unexpected return phone call indicating that a rescinded reaffirmation may spur repossession even if current (this would be the case had I not reaffirmed as well). The CU seemingly doesn't have a policy in place; however, the rep recommended contacting the attorney who handled the reaffirmation. Another call slated for tomorrow.

Bottom line: I don't think my CU has a clue about BK (I have other supportive evidence). I need a car. I'm building the means to purchase outright; however, I haven't achieved this. Do I gamble by rescinding or do I secure personal transportation by reaffirming personal liability?

[BCA2009]

How easy will it be to another dependable low payment vehicle? You don't want to end up at a "Buy Here - Pay Here" dealership.

If the vehicle in just barely upside down, I would probably keep it (re-affirm) unless you already have a plan for it's replacement.

I wonder if the CU would let you re-affirm after a repo. You could take a chance on them repo-ing and if they do, go back and ask if you can still re-affirm. I don't know if they would do that or not. Might be worth a try.

good luck!

[BobMango]

I think you're taking a bigger risk by sticking with the reaffirmation. You don't like the car and you're just about even on equity. I'd cancel the reaffirmation and call the CU's bluff. I think the odds are that they don't want it back if the loan is performing. The only wrinkle I could think of is if your reaffirmation modified the terms of the agreement, then you might have a bigger problem doing a ride through after canceling.

[HakunaMatata]

BCA, I definitely don't want to end up at a "buy here, pay here". You're correct, I have a low payment and a low interest rate; however, other factors seem to be trumping these. I don't like the car (yet don't have means to purchase outright). My loan is reporting as IIB (no credit benefit to me). Saab-Spyker is seemingly sketchy.

I know I should be grateful to have a car with a low payment/interest rate. I keep reminding myself that a car is a car is a car (tough to do with a quirky Saab and being raised in the "Motor City"!). I'm concerned I'm being selfish from this dislike the vehicle perspective. YET, I have the oppportunity to relinquish personal liability to a vehicle I don't enjoy. I have intentions of keeping it provided it's not repossessed; although, it would be nice to give it back when I have the financial means to purchase better suited transportation.

Bob, I'm leaning in your direction (and I have to lean quickly because I have less than two weeks to rescind). I don't feel there is great risk with the loan. I'll pay it if I'm obligated. The equity is a concern. I feel the CU would be more likely to repo when equity is break-even to slightly below. The CU stands to gain more for the vehicle now than they would in the future (especially if Saab becomes extinct ).

[backtoschool]

BCA, I definitely don't want to end up at a "buy here, pay here". You're correct, I have a low payment and a low interest rate; however, other factors seem to be trumping these. I don't like the car (yet don't have means to purchase outright). My loan is reporting as IIB (no credit benefit to me). Saab-Spyker is seemingly sketchy.

I know I should be grateful to have a car with a low payment/interest rate. I keep reminding myself that a car is a car is a car (tough to do with a quirky Saab and being raised in the "Motor City"!). I'm concerned I'm being selfish from this dislike the vehicle perspective. YET, I have the oppportunity to relinquish personal liability to a vehicle I don't enjoy. I have intentions of keeping it provided it's not repossessed; although, it would be nice to give it back when I have the financial means to purchase better suited transportation.

Bob, I'm leaning in your direction (and I have to lean quickly because I have less than two weeks to rescind). I don't feel there is great risk with the loan. I'll pay it if I'm obligated. The equity is a concern. I feel the CU would be more likely to repo when equity is break-even to slightly below. The CU stands to gain more for the vehicle now than they would in the future (especially if Saab becomes extinct ).

The Saab is only going to plummet in value as Saab disappears of the face of the earth, or retreats into the deep backwoods of Sweden.

The day I got rid of my Saab was one of my happiest.

With equity in the car, it is in the CU's interest to repo quickly, so you need a plan for a replacement car asap.

Get rid of the car, bite the bullet on a year or so of high interest rates, and get the car you want, then refinance it to a lower rate in a year.

or....

Buy a car that will last a year or so and then get the car you want when you can get the interest rate you want.

[HakunaMatata]

When I discussed the possibility of rescinding with my attorney, the future of Saab was addressed. I mentioned Spyker sold 23 cars last year. My attorney proclaimed Saab-Spyker was surely headed toward success because they may be able to triple their annual sales!

BTS-
Great plan (I like the cash car program because ridiculously high interest rates scare me). Only one flaw...cash. My ultimate goal is to achieve this; and, my current budget will support it in time.

Hopefully I'll have better direction tomorrow after talking to the CU attorney.

[PoorGrammyinBK7]

We did not reaffirm and I am glad. We kept paying and there was never a problem - also both loans with a credit union, by the way. No crisis and we paid off the older car last fall and the newer one a few weeks ago. Our lawyer had advised not reaffirming because so many things could happen such as: loss of job, a costly illness, even a car accident or major repairs suddenly needed - and if not reaffirmed, we could walk.

Its unlikely they would repo a car when you are current and never late. It has happened (heard of a recent case - Chrysler I think - not sure) but it would be very rare - even though they can do it, I guess. They are happy if you pay and most do not want to repo a car and have to sell it.

[HakunaMatata]

Just got off the phone with Mister CU Attorney. I'm still bereft of answers! The guy initially stated he'd be "incredibly surprised" if the CU repossessed a current vehicle ("why would they want to do that?"). He proclaimed to represent numerous banking institutions and has not heard of a creditor repossessing a current vehicle (no, I didn't tell him to join the BK Forum ).

He later admitted the CU doesn't have a policy in place. Consequently, he "thought" they'd treat each case individually. He transformed his chatter slightly and shared his perspective "I wouldn't want those guys coming after my car. They're scary and all in the middle of the night". I explained my BK was proactive financial planning and if I found myself in a position where I recognized I couldn't afford my auto loan payments, I would voluntarily surrender. At some point, Mister Attorney stated he's not the foremost authority. Lovely. Who can give me an answer?!!

I briefly explained my overall experience and kindly expressed my dismay at the CUs lack of BK knowledge. I mentioned my loan payments had continued to be automatically deducted during my BK process despite the misinformation I received from the onsite BK "authority" (who caused double payments since I was told automatic deductions would cease). I touched on credit reporting as well and received conflicting responses ("should report as IIB" and "oh...what did you say...yes, it should be pays as agreed"). Finally, I addressed the notion of rescinding. The attorney prefaced that he represents the CU (completely understandable) and he HAS to encourage others to reaffirm -it's mutually beneficial.

I'm a huge fan of consistency. Why can't the rest of the world join me in this?!! How can these institutions survive without standard practices and policies? Oh, wait...I'm a unique individual. I get my own policy. Ugh.

So...to rescind or continue along the reaffirmation path? Apparently I have to make this decision blindly (since no one has a clue how this is addressed!). These hindsight 20/20 lessons aren't enjoyable.