Reaffirmation questions

[limabean]

I filed Ch 7 Pro Se at the end of April.
I have a good car that I want to keep and I believe I can afford. My loan is for about $4K less than the value of the car. The interest rate is great and better than anything I will see for a few years forward!
I chose to reaffirm (American Honda financial) and am now waiting to see what the process will be.
Technically, the amounts on forms I and J indicate that including the car loan, my expenses exceed my income by $200 each month, but I have exempt assets that I can access to supplement my income and I believe I can afford the car.
I am current on my payments and have not been late on payments in the two years I've had the car loan.

Given other comments on this forum around judges not signing reaffirmation agreements, and the technical issue of my income being less than my expenses when including this payment, what should I expect?

If the judge refuses to sign, do I keep the car by continuing to pay on the loan? Or do I live in fear of the repo man? I am in CA.

Also - my 60 days is up soon - will the reaffirmation hearing delay discharge, or are they parallel processes?
Advice please!
Thanks.

[Sara1]

I don't know.We are in the similar situation,63 days after 341 meeting and waiting for discharge and reaffirmation hearing.Maybe somebody can answer this.

[zinoy]

We are in the same boat. 63 days in awaiting discharge status and a notice for a reaffirmation hearing on 9/14. They said we could submit a declaration as to why we feel we need the reaff, and I did as this is my primary vehicle and is paid off in October!. 3 more payments! The other one we will be surrendering as it is still 23K left on the loan.

According to PACER mostly everyone who filed the same day as us have already gotten discharges. Only about 15-20% have not and they have had creditor objections and motions to extend.

[limabean]

Talked to creditor and they would do a 'ride through' if the reaffirmation is not approved by the judge. I suppose that is what most posters on other threads recommend - do the ride through and avoid the reaffirmation issues.

BUT

What is to prevent the creditor from changing the terms if I don't reaffirm? I know they don't want to repo, but if they up the interest rate I would be disappointed to say the least. If I reaffirm, they can't do that, as they'll be bound by original terms.

I'm concerned as the rate is 2% and I have another 3 years to go. If I get another loan, it'd be more like 15% now!! If that!

[blockhead]

Talked to creditor and they would do a 'ride through' if the reaffirmation is not approved by the judge. I suppose that is what most posters on other threads recommend - do the ride through and avoid the reaffirmation issues.

BUT

What is to prevent the creditor from changing the terms if I don't reaffirm? I know they don't want to repo, but if they up the interest rate I would be disappointed to say the least. If I reaffirm, they can't do that, as they'll be bound by original terms.

I'm concerned as the rate is 2% and I have another 3 years to go. If I get another loan, it'd be more like 15% now!! If that!

This will depend on state law

[limabean]

Thanks for the reply - what area of law? I'm in CA. Any clues as to how to research this? I'm pro se.

[yomann]

...........What is to prevent the creditor from changing the terms if I don't reaffirm? I know they don't want to repo, but if they up the interest rate I would be disappointed to say the least. If I reaffirm, they can't do that, as they'll be bound by original terms.

I'm concerned as the rate is 2% and I have another 3 years to go. If I get another loan, it'd be more like 15% now!! If that!

I don't believe a reputable org. like American Honda will play games with you.
You will be paying on an existing loan, and it is highly unlikely they will change the terms on you. JMO.

[tcreegan]

state consumer protection law

Hello all,

Reaffirmation agreements are a "new" contract between you and the creditor. The terms are spelled out and both sign it.

Federal rules require reaffirmation agreements to be filed with the court. This means signed documents and a form (specified in the local bankruptcy rules) have to be rec'd by the court by 60 days after the 341 hearing.

Pro se debtors have to show at a reaffirmation hearing and explain to the judge why it is in their best interest to have the reaffirmation. The judge may accept or deny the reaffirmation agreement. If expenses exceed income (Schedule I and J) expect a denial.

BK attorneys can sign-off on reaffirmation agreements. Better attorneys will not do this (it exposes them to liability) Even if an attorney signs off on a reaffirmation, the judge may still reject it. Not sure how often this occurs...?

Reaffirmation hearings extend the time to discharge. They have to be processed by the court, hearing has to be held. Time of delay varies by court (how busy they are)

Debtors can cancel a reaffirmation up to 60 days after signing one.

If you do NOT reaffirm, you lose protection at the federal level. Federal courts have ruled they can come get your property whenever they want, even if you are current on payments.

You do NOT lose protection at the state level. This will be covered in the Consumer Protection Law of your state. This really varies, there are lots of grey areas, best to cover this with a good attorney.

Not reaffirming and staying current on payments is called a "ride through" Some finance companies are OK with this, some are not. Some states have laws that protect this (Mass.), some don't (WV).

Hope this helps!

Tom in Colo

[ssmdem]

I'm starting to worry about this. Our auto loan is through Wells Fargo. We bought it a few months ago because our old car wasn't going to last much longer, and we knew bankruptcy would be coming up. Now I'm wondering why that is recommended so often if the chances of you having the loan reaffirmed aren't great. Our interest rate is decent for a used vehicle, and the payment is low. I really am worried about them taking it now. We only have about $1000 equity in it. Payments are current and will stay current - should I be concerned?

[keepmine]

I'm starting to worry about this. Our auto loan is through Wells Fargo. We bought it a few months ago because our old car wasn't going to last much longer, and we knew bankruptcy would be coming up. Now I'm wondering why that is recommended so often if the chances of you having the loan reaffirmed aren't great. Our interest rate is decent for a used vehicle, and the payment is low. I really am worried about them taking it now. We only have about $1000 equity in it. Payments are current and will stay current - should I be concerned?

There is plenty of caelaw in several districts that say all you need do is offer to reaffirm. The bk code does not say the reaffirmation must be approved.
Here's a link to one such ruling.

http://www.georgiabankruptcyblog.com/archives/miscellaneous-cases-arizona-bankruptcy-court-ride-through-still-available-for-secured-debts-after-failure-of-timely-filed-reaffirmation-agreement.html

[ssmdem]

There is plenty of caelaw in several districts that say all you need do is offer to reaffirm. The bk code does not say the reaffirmation must be approved.
Here's a link to one such ruling.

http://www.georgiabankruptcyblog.com...agreement.html

I hope so. My attorney only asked if we were current on payments, how much equity we had, and if we planned to keep the car. She never mentioned there possibly being an issue, so I'm hoping there's nothing to worry about. Everything else she went into great depth into what our options were, what could happen, etc - and this loan she just said, "Okay" and moved on. So guess that's a good sign.

[limabean]

I talked to my creditor again about the consequences of not having the reaffirmation approved and they told me something I hadn't heard anywhere here that is important to me:

If it is reaffirmed (approved by the judge etc), then the payment history will be reported to the credit bureaus. If it is not approved for reaffirmation, then no information will go to the bureaus and it will show as a discharged loan. Big difference to my post-bk credit scores etc. And since one day I do want to buy a house, I will try hard to get the reaffirmation approved.

[ssmdem]

I talked to my creditor again about the consequences of not having the reaffirmation approved and they told me something I hadn't heard anywhere here that is important to me:

If it is reaffirmed (approved by the judge etc), then the payment history will be reported to the credit bureaus. If it is not approved for reaffirmation, then no information will go to the bureaus and it will show as a discharged loan. Big difference to my post-bk credit scores etc. And since one day I do want to buy a house, I will try hard to get the reaffirmation approved.

I agree - I'm praying that I can get my reaffirmed so that, #1 - don't have to worry about them coming to get it --- but #2, I certainly want to work on rebuilding my credit as soon as possible so we can get back into an affordable house soon.

[tcreegan]

perform on reaffirmation

Hello all,

Keepmine is correct, there are court cases where the creditor could not repo property if a reaffirmation agreement was made between debtor and creditor regardless of what the BK court did.

Be careful, you and the finance company have to reach an agreement, both sign it, and get it filed with the BK court within 45 days of the 341 mtg.

This called "performing on your intention"

Also be careful b/c there are conflicting decisions in court law. Georgia/S. Carolina/Arizona rulings say having the reaff. inked between creditor and debtor is enough to stay repossession (and you stay current on payments) but Virginia court has ruled the opposite.

What is going on in your BK district?
Getting a reaff. signed, then having it denied, or cancelling it yourself is a good way to go...no liability on the debt, but in many places the creditor cannot repossess if you stay current.

Hope this helps,

Tom in Colo

ps: Limabean, reaffs are voluntary for both debtor and creditor. Creditor is not required to stick to original terms.

[ssmdem]

Alright, let's say they reaffirm but change the terms of the loan significantly with the reaffirmation (high interest rate), should I just not reaffirm at that point and keep paying and cross my fingers? Or would I be better off letting my parents "buy" the car from me and have it financed and I'll just pay their car note at that point?