Reaffirm House/Vehicle

[telco95]

Hello,

We filed for ch 7 on 7/15. We want to reaffirm the house and our vehicle. I called our paralegal on Mon, and she said that she had not received anything from Wells Fargo (house) or Regional Acceptance (truck). We are current on both. Has anyone not ever gotten paperwork to reaffirm loans? Our 341 is next week. Should I call to see if they are going to send anything over or just wait and see what happens? I've read horror stories about people not reaffirming and getting their vehicle repoed, even though they were current. Thanks!

[wnguyen]

I had the same question about whether or not should I reaffirm my car. From what I've done some researches and advices from the fellas here in this forum, reaffirming is not a good option.

I just talked to my lawyer this morning and she said that if I really want to keep the car, then I should reaffirm. I found that pretty stupid (no offense though) and not sound like an experienced atty at all. So far, Toyota has not sent me anything yet. On the petition, she put me down for reaffirm but I WON'T do it.

[telco95]

I want to keep my vehicle because I put $2k down on it 2 months ago. I had a vehicle repoed because I was 2 weeks late and they also knew I was filing for bankruptcy. It stinks having a vehicle repoed, having to get financed for another one, the questions of why don't you have a vehicle, and having to ask for a ride.

[Maine]

ride through: payments and escrow ?'s

sorry- meant to start a new thread

[TEW]

Do NOT reaffirm anything there is not good excuse for doing that. It's just plane foolishness. Keep paying the loans.

[tcreegan]

more ride throughs

Hi all, caselaw is piling up that holds if you make an effort at reaffirmation (marking reaffirm on statement of intentions) and stay current, then you are not in breach of contract simply b/c of a BK filing. As long as you stay current, lender cannot repossess. Lots of state laws back this up.

teleco95, what state are you in? Getting repo'd for 2 weeks late and rumored to be filing BK sounds pretty fishy.....I'll bet they broke state laws in that one.

Regards the reaffirms, they don't have to be inked b4 the 341, but before the discharge.

Good luck with all this,

Tom in Colo

[brokejoker]

We got the car reaffirmations at the 341 meeting but no house reaffirmation yet. I don't think we'll be reaffirming the house since they didn't send the paperwork but for us it made no sense NOT to reaffirm our cars.

[telco95]

I'm in Texas. I asked to reaffirm the cars, house, and 1 CC ($800 limit) that is linked to my checking account.

Compass Bank said that we signed a contract, and as long as we were 1 day late, we were in default. They viewed the bankruptcy as a threat and decided to repo.

This process has been hard on us, bankruptcy has been a humbling experience. Our 341 meeting is on 8/19, I can't wait to put all this behind us and move foward. Thanks.

[UpaCreekinCA]

I would talk to your lawyer regarding Compass Bank. They potentially took a Preference that the court may not be happy about. That car potentially could be an asset depending on the value. I've never seen a car contract that allows for repos under 30 days late.

[telco95]

We were upside down on the vehicle and had 3 more yrs of payments. Our lawyer was going to try and reaffirm the loan, but we just let it go.

[tcreegan]

illegal repo

I agree with UpaCreek, I think Compass Bank acted illegally.

From Texas Debt Collections Act:

Threaten that non-payment may result in seizure, repossession or sale of the debtor's property without proper court proceedings.

A debt collector must send the consumer debtor a written notice, which basically serves to verify the validity of the debt and to provide the debtor with an opportunity to dispute the debt. The notice must show the amount of the debt and the name of the creditor to whom the debt is owed.

Too bad the penalties are only $100 - $500

Plus I have never heard of a loan that didn't have at least 30 days nonpayment to be in default. Stranger things have happened, but I'll bet if you look at your loan papers the default period is 30 days or more.

On reaffirmations:
You can reaffirm past the 341, just needs to be pre-discharge. And nothing prevents you from signing a modification outside the scope of the BK.

That said:
Standard warning: reaffirms or new contract; you become legally liable for the debt. If you default, the property can be sold at auction and you held responsible for the difference of what was owed and the proceeds of the sale. Given the risks, it is best to consult with a financial advisor.

Go after Compass Bank !! Intimidation from a bank of their stature is not acceptable behavior. Reaffirming b/c you were unfairly intimidated by a bank is not OK.

Tom in Colo

[Cobra611]

I live in NY, and my lawyer told me to help get me under Ch.7, to go out and buy a new car or two(me and my wife)...to take the place of the 2 vehicles that we are upside down on now. Then we would reaffirm the new car loans, turn in the old vehicles and reaffirm our house as well. Does sound logical? I took the Means test last week (well, gave all my info to my lawyers legal secretary), and expect an answer sometime this week. He sounded very confident when telling me this. But, seeing what some of you wrote here, kinda makes me skeptical. My wife and I are current to all of our creditors, but being out of work has left me fighting to stay above water.

[tcreegan]

sounds fishy

Hi Cobra611,

I live in NY, and my lawyer told me to help get me under Ch.7, to go out and buy a new car or two(me and my wife)...to take the place of the 2 vehicles that we are upside down on now. Then we would reaffirm the new car loans, turn in the old vehicles and reaffirm our house as well.

The car part makes no sense but you might have misunderstood your lawyer.

Two new vehicles w/ upside down loans will give you all the expenses allowed on the means test. Buying more vehicles will not help.

Reaffirming upside down new car loans is never a good idea. A good lawyer will not sign-off on these.

NY has a $2400 vehicle exemption, doubled if you and wife are filing jointly.
You buy two older vehicles for $4800 total and you get to keep them through the BK

On the house we need more info:

House value
House loan amt
House equity

Being current doesn't count for much in a BK. If you are serious about the BK, stop paying your creditors immediately. Only stay current on the house or car(s) you plan to keep through the BK.

BUT...get some good advice whether you should keep the house and cars. It may not be possible or in your best interest to keep them, and you can stop payments, live and drive for free for awhile and save the payments for your new place and new (used low mileage) cars.

Did you interview several lawyers? If not, it is a good idea. Most will have a free consultation where you can ask questions.

Have you taken the class required b4 you can file BK? If not, this is an excellent place to get questions answered. Go to your local BK court website for a list of approved agencies.

Hope this helps, good luck with all this,

Tom in Colo

[Cobra611]

Tom,
Thank you very much for your response. I'll try to explain the best I can what was said to me by my lawyer. But, yes, I have spoken with 3 lawyers at this point, and felt most comfortable with this one. Now, regarding the cars. My wife and I each have one car. One titled to me and one to her. But when my wife's car was paid off, I took a loan out against it. So now, both loans are in my name. At this point we are not sure if she's going through with filing...I'm 95% certain I will, IF it turns out I can file Ch. 7. If I can only file Ch. 13, then I'm 75% certain I will follow through. At this time, I have an '01 Acura CL Type with a trade in value of $2500(got that trade-in quote from a local dealer), but still owe approx. $4800 on the loan. My wife has an '02 Toyota Rav 4, and according to KBB is worth no more than $3500. But, I still owe approx. $11,000 on the loan I took out against it. As you can see, I'm really upside down on these vehicles. My wife and I both need our cars, even though I'm still out of work. So, we would have to reaffirm the loans to keep our cars. And because of the age and condition of our vehicles(both have over 160k miles), the lawyer suggested getting newer vehicles and holding on to them, while including the older cars in the filing.

As for the house, we JUST refinanced and had our closing yesterday. The loan is for $325k, and the appraisal came in at $363k. The mortgage is in JUST my wife's name. Losing the house is something we do not want...we would be completely devastated if that happened. She has nearly the same amount of unsecured debt and I do. My unsecured is roughly $27k, and add to that the car loans totaling nearly $43k. Her unsecured is about $42k, but $10k of that is mine...but under her name

My misunderstanding is that he wanted us to do this so it would also help with our expenses each month when doing the means test. Of course, I am pretty clueless to any of this, which is why I searched and found this forum. I went to the Nolo site and tried doing the means test there to get an idea if I would pass. But, again, I'm pretty clueless as how to fill it out. I am not good with numbers, or even figuring out what I can and cannot claim. Even though it makes it pretty clear...I just don't get it. So, at this point I just sit and wait for the lawyers office to call and tell me if I passed the means test. We wouldn't be filing until September, mainly because my wife works in a school and has MUCH less pay during the summer months. Even with this, we're STILL about twice what is allowed monthly here in NY.

Anyway, thank you very much!!

Billy

[tcreegan]

Acura
value 2500
owe 4800

Toyota Rav
value 3500
owe 11,000

Both high mileage, good advice to NOT reaffirm these !!
In the bankruptcy these are surrendered.

Stop paying on these two cars immediately or sooner. Take the $$ and put it toward two used low mileage cars that you will be able to easily afford post BK.

Do a reaffirm or better yet a 'ride through' on these 'new' used cars you will keep after the BK

I think I get the car picture now.

How about the house? You owe what it is worth so no equity. Property values going up in your neighborhood? Do the new terms sound like they would be OK in the future if something happens? Are you brought current with the mod? Do you have a fixed low interest rate? Does an impartial financial advisor reccommend keeping the home? (remember, do this as a business decision, not an emotional decision)

If you have a new mod signed before the BK, the best plan is to NOT reaffirm the debt but stay in the house and stay current on payments. Talk to your lender and tell them that is what you what you plan to do. This is called a 'ride through' or a 'retain and pay' You stay in the property, stay current w/ payments, but are not legally liable for the debt. If things get worse down the road, you can just walk away. Some lenders do not like this and will not do it. You can also sign the loan mod after the BK, where you do become legally liable for the debt and can be sued if you default. (this is just between you and the lender. BK court not involved)

gotta run,

Tom in Colo