question about reaffirming a car loan

[tacomeat]

i have about $5000 left on my car loan and about $4000 in positive equity. state exemption is $5000 i believe.

so ideally i would like to reaffirm. however, i have no job and no regular source of income so i would fail the budget test.

1. are there any ways to deal with this so that i can keep the car? i have enough money in my IRA to cover the car loan, so could i just claim a future withdrawal as "income" which will be used to pay off the loan and/or meet the budget test?

2. on one of my free attny consults, the attny sort of said/implied this -
that the date of filing sort of freezes my financial picture and that THAT is the information used to get through the bk process. so any decisions i make after that wont affect the bk process. and what he seemed to suggest was this. after i actually file (an accurate assessment as of that date) then i could withdraw the $5000 out of my ira, pay off my car loan and then keep the car (and that it wouldnt ruin the exemption and wouldnt be able to be taken by the creditors). so does this make sense?

[BobMango]

Since you have no income to pay the note, your lawyer will not sign the reaffirmation agreement, which means a hearing before a judge. I'd tell the judge that you expect to have the income to pay the note, but if not you have enough positive equity to be able to sell it and settle the note if need be.

Worst case is that the judge denies the reaffirmation, you keep making payments and at some point your lender repos. At that point you should be able to withdraw the funds to pay if off and get it back. I'd just plan on doing a ride through if possible and only withdraw funds to pay if absolutely necessary. Good luck.

[tacomeat]

Since you have no income to pay the note, your lawyer will not sign the reaffirmation agreement, which means a hearing before a judge. I'd tell the judge that you expect to have the income to pay the note, but if not you have enough positive equity to be able to sell it and settle the note if need be.

Worst case is that the judge denies the reaffirmation, you keep making payments and at some point your lender repos. At that point you should be able to withdraw the funds to pay if off and get it back. I'd just plan on doing a ride through if possible and only withdraw funds to pay if absolutely necessary. Good luck.

thanks. sorry for the delayed response to your response (hope you're still around).

ok, so it would seem that the second paragraph is the more likely path. im assuming the reaffirm would be denied. so how do i keep making payments DURING bk, because if i have money on hand to make the payments ($248 a month) i would either have to declare that money on the date of filing (and then probably couldnt spend it - and might lose a portion of it), or pay a couple months ahead and declare that. right?

also, if the reaffirm is denied - do i just leave that note out of my bk filing altogether? this is the one payment i have remained current on.

what does "doing a ride through" mean?

and why would the bank repo my car if im current on my payments? are you saying i would/should stop making the payments for a few months when i file, wait for the discharge and then resume payments and hope they havent repoed by then? or do i contact the bank, and make some kind of deal with them where i say hey, im going to miss about 3 payments but i will pay it off in 3 months?



maybe you need to fill in the blanks a little more for me - im a newbie, lol. thx.


PS - the other thing ive considered is trying to find a part time job between now and the time i file, just to be able to show some income
on a budget means test to get the reaffirm. then when the bk is done, i would probably quit the job. lol. would it be worth it to do that?

[keepmine]

It's never a good idea to raid an IRA to make payments on something that is depreciating.
I'd get that pt job and hang on to it.

In many districts, courts have decided that all you need do is offer to reaffirm. The code does not say the reaffirmation needs to be approved.In that case, you just keep making payments and the lender can't repo.
For sure, don't skip any payments.
I'd just focus on being sure I had income to support myself post bk. At some point, that car will start needing repair, tires,etc. Along with operating expenses and insurance, you'll just keep depleting that IRA.

[tacomeat]

i know you're not supposed to raid the IRA ... in a perfect world. but since im not even willing (or able, with my problems) to get a job at this point it probably doesnt matter much either way. besides, an ira with $10,000 in it, vs an ira with $5000 really isnt going to make much difference. my ira had close to $200k in it about 10 years ago and that was gone without me withdrawing one red cent. i could have cashed the whole thing out, paid off my house and probably be in a MUCH better position today. oh well