Question about signing a reaffirmation on an auto loan

[Ann]

Hi everyone, I know this question has been asked many times but still I don't understand. My first attorney was against signing any reaffirmation on my mortgage or my auto's. One auto will be paid off in July of this year and one in October of this year. I noticed (though we never did discuss it) on the "homework" packet that my new attorney will have me sign a reaffirmation on my autos. Please one more time please explain to me the reason you would or would not sign such papers. Still confused. BTW... we are HOPING to file in May.

[SMinGA]

Some states/lenders require it.

Signing makes you responsible for payment after the bankruptcy. Since you are so close to being done with the loans, I see no harm in it. You probably have equity - since the balances are almost paid off. Meaning if you were to total one or the other, its not likely you'd be left with a deficiency balance after the insurance paid up.

The advantage to not signing, if your state/lender allows 'ride thrus', is that if you decide later you don't want to keep the car or can't afford the payment, you can let it go and not owe the balance.

[Faust]

If you sign it and later default the lender can come after you for the outstanding amount.

We got a reaffirmation from Capital One for one of our cars but I'm not going to sign it unless the have a fit. I just don't want to be committed to the loan in this economy.

[Ann]

My old attorney stated that if we did not reaffirm with our lender then they have to right to repo the car if they want regardless of whether or not we are current. Some lenders are more "friendlier" and will allow a ride through but some (GMAC) are notorious for coming and getting the car even if there is only one payment left and there is not a thing I can do about it except that when they auction it off I would get a refund for my part of the equity??? ( I may have that part really wrong but some kind of refund is what I would get is what my lawyer told me) I think I will sign. I really do not want them coming at me and taking away something that I have paid almost 5 years on. It is a very nice decent car and although it does show a little wear and tear (a few dings and dents) I want to keep it. My first mortgage is another issue and I'm hoping he won't have me reaffirm my second.

[Faust]

Yes, there is that chance but it's not likey they would go to the trouble of repo'ing a car that is current on payments. Not sure what would happen to your equity. You could probably challenge that in court.