"Back Door" Ride Through / Ride & Pay"???

[gman]

I have an interesting issue regarding my car - and would love some advice:

Scenario:

* I will show about -$4,000 on Schedule J on my Chapter 7

* This means a judge is very unlikely to allow me to reaffirm the debt

* I would like to keep my car - and one reason is it actually has about $2,000 in equity. Another is I only have 14 payments left and the car runs well.

* I live in the Northern Georgia BK and 11th Circuit Court District (where judges want to see debts reaffirmed)

* However - I found this recent case that somewhat matches mine.
---http://www.georgiabankruptcyblog.com/archives/northern-district-cases-nd-ga-court-may-consider-reaffirmation-agreement-where-debtors-attorney-refuses-to-provide-certification.html

* In this case - the debtor wanted to reaffirm her debt - but her attorney refused to sign the reaffirmation. The judge ruled "In the final analysis, it is the client, not the lawyer, who makes the decision about reaffirmation."

* The judge then denied her reaffirmation request (remember - she has negative Schedule J income.) But, interestingly - the judge then said in the ruling that "she could continue to make voluntary payments to the lender to pay off the debt."

I found another article about "Back Door Ride Throughs" by an attorney in Arizona who outlines the debtor strategy. Her point is that the #1 thing for debtors to do is to actually seek affirmation and be OK with the denial. Strange, but true. You can read more here:

http://www.ecsears.com/bankruptcy/%E2%80%9Cback-door-ride-through%E2%80%9D-and-chapter-7-bankruptcy/

Back to my situation:

ASSUMING I WANT TO KEEP THE CAR - DOES ANYONE SEE ANY POTENTIAL SNAGS WITH THIS BACK-DOOR RIDE THROUGH APPROACH?

DOES ANYONE HAVE EXPERIENCE WITH THIS TO SHARE?

Thanks to all who chime in.

[justfiveofus]

We did it. In fact, the gal at our credit union basically told us that it doesn't do us any good to reaffirm the debt because the debt is currect. She said if we keep making the payments then they aren't coming for the cars. The only thing that would negatively affect us with our credit union is if we cause them a loss of some sort... so probably if they had to repo it, then they'd just close all of our checking/savings accounts. Good luck!

[gman]

We did it. In fact, the gal at our credit union basically told us that it doesn't do us any good to reaffirm the debt because the debt is currect. She said if we keep making the payments then they aren't coming for the cars. The only thing that would negatively affect us with our credit union is if we cause them a loss of some sort... so probably if they had to repo it, then they'd just close all of our checking/savings accounts. Good luck!

1. DID YOU HAVE AN EQUITY IN THE CAR OR WAS THE LOAN "UPSIDE DOWN"?

2. DID YOU GET ANYTHING IN WRITING FROM THEM PROMISING NOT TO TRY AND REPO AFTER THE BK WAS DISCHARGED AS LONG AS YOU WERE CURRENT?

(Note: I have never been late on my car loan.)

[ccsjoe]

We are only reaffirming because Ford is well known for repo'ing if people try and do ride & pays. If we had the option of ride & pay believe me, we would.

[wonderingrov]

I'm in North Georgia myself. I thought I was going to have to reaffirm (I'm with Ford Credit), but it turns out they don't do reaffirmations on debt with balances lower than $5,000. My balance was around $4,800 at filing, so I missed that one by the skin of my teeth.

[justfiveofus]

1. DID YOU HAVE AN EQUITY IN THE CAR OR WAS THE LOAN "UPSIDE DOWN"? We claimed no equity in either vehicles, the loans about break even on them if we took the time to sell them private party however if they were sold to a lot off the street they'd show a negative equity. Hope that makes sense. Also, our original plan was to reaffirm however when we received our reaffirmation paperwork from the bank (we filed prose), they showed that we had about 5K in equity between the two vehicles because of how the banks figure the value of your vehicle. They use a special tool that takes the vehicles condition, mileage, etc the day that you originally purchased it and puts a value on that for today and they do not take into consideration the current condition, mileage, etc on the vehicle. We didn't want to go to the courts with a document signed by us that said yep we have 5K equity in our vehicles when we do not. I argued with the bank but they insisted this is the way it's done.

2. DID YOU GET ANYTHING IN WRITING FROM THEM PROMISING NOT TO TRY AND REPO AFTER THE BK WAS DISCHARGED AS LONG AS YOU WERE CURRENT? No, and I'm sure there's no way they'd do that. However, I've been with this credit union for 15 years and have never defaulted on anything with them so I guess it's mostly a trust thing. I called their BK dept and talked to a gal, she was very helpful. Maybe you could call your lender and just ask to speak with someone in their BK dept and just ask them if you keep your payments current if they're going to come get your car any way. It's their right to, however they probably wouldn't make anything on the vehicle because it'd be sold at auction, plus they'd have to pay repo costs, etc...and you'd get anything that they would have made as long as you claim the exemption so there's really no good reason for them to spend the time and energy repo'ing a vehicle that's being paid for.

(Note: I have never been late on my car loan.)

Hope that all made sense.

[justfiveofus]

Also, remember, no matter how much you owe or how much time you have left on the loan it may still not be in your best interest. We never know when we will lose income, etc. That was a big deciding factor for us. While we have one low mileage vehicle, we still have 2 years to pay off our high mileage vehicle and we thought the option to turn it over at any time was a good one incase something major goes wrong with it in that time and we can't fix it.

[Sara1]

We had reaffirmation hearing las week and judge didn't aprove reafirmation.She said that we keep paying the car.I called my CU and they said they will not take car as long as we making payments.

[wnguyen]

I called my car lender, Toyota Fiancial, 2 days ago and asked them to send me the statements and/or open online payment again and they said if I wanted that I would have to reaffirm the loan. I said I didn't want to reaffirm it, they said that was fine so long as I kept making payment. To double check with them, I asked them again that would they repo my car if the loan is current and the gentleman (he was quite nice) said no.

[ccsjoe]

gman, as long as you don't reaffirm they will not send you anything in writing because the loan itself is discharged and any attempt on their part to do anything but repo could be considered a violation...for example sending you a statement or referring to your loan in writing.

[gman]

gman, as long as you don't reaffirm they will not send you anything in writing because the loan itself is discharged and any attempt on their part to do anything but repo could be considered a violation...for example sending you a statement or referring to your loan in writing.

Interesting. I read something similar to this on the Internet today.

So - this leads to some questions:

1. Assuming I continue to make payments - yet they will [likely] not send me statements - what happens when the loan has been truly paid in full? Should I expect that the will send me the title?

2. If there is a fly in the ointment on the above question - what does one do?

The blog I read said in essence when one does this approach - you are no longer personally liable for the car - but the on the flip side you do not get the car for free either (because the creditor can always repossess.) This blog said if you stop paying - expect a repo [duh!] But it also said if you wreck/total the car AND your insurance is not enough to pay off the loan balance - YOU ARE NOT LIABLE FOR THE DIFFERENCE.

I could really use some concrete guidance on this.

Thanks to all who help!

[ccsjoe]

Interesting. I read something similar to this on the Internet today.

So - this leads to some questions:

1. Assuming I continue to make payments - yet they will [likely] not send me statements - what happens when the loan has been truly paid in full? Should I expect that the will send me the title?

2. If there is a fly in the ointment on the above question - what does one do?

The blog I read said in essence when one does this approach - you are no longer personally liable for the car - but the on the flip side you do not get the car for free either (because the creditor can always repossess.) This blog said if you stop paying - expect a repo [duh!] But it also said if you wreck/total the car AND your insurance is not enough to pay off the loan balance - YOU ARE NOT LIABLE FOR THE DIFFERENCE.

I could really use some concrete guidance on this.

Thanks to all who help!

1. Yes, they will send you title. The only thing they can not contact you about is the loan itself. Think of title as a separate item, like mortgage and deed.

2. Yes, if you do not reaffirm, the loan is discharged (technically meaning the lender's ability to collect from you is discharged) hence you are no longer liable for the loan and/or deficiency.

For a fly in the ointment, use your phone. They can talk to you about it, just not send you anything in writing.

[biotechsolution]

the only disadvantage is that the loan will always be considered IIB even if you pay it off without reaffirming. I had a 0% Ford loan and did a ride through without problem, sent out the title when it was paid off.
But in the future it may be harder to get a loan financed by Ford because they will have considered the previous loan IIB, doesn't matter that it was paid off.

[tcreegan]

Hi gman!

You are always so on top of things I don't jump in on anything!

Just wanted to reaffirm that lawyers don't like to sign off on a reaffirmation. Lawyers get exposed to some liability if they sign off on the reaffirmation so it is not in their best interest to do so. They have you go to the court and ask the judge, but as you previously noted this approval doesn't matter much. Your source who says that merely trying to reaffirm is enough confirms several sources I have read; lawyer just north of you (S. Car.) make this his routine practice; attempt to reaffirm but never sign the papers. He said this is "performing on the contract" and the BK filing does not constitute a breach of contract. So as long as you abide by the terms of the contract, the lender cannot repossess, foreclose, whatever options they have in a case of breach of contract. I know you like sources, but danged if I can find the guys name......arghhh...

Tom in Colo

ps: biotech, you can get the IIB notation changed to 'paid as agreed' It is a pain-in-the-*** and takes a lot of letters but can be done.

[tcreegan]

gman, a few brain cells went to work....Russell DeMott, Charleston

http://www.scbankruptcyattorney.com/blog/bankruptcy-reaffirmation-agreements-part-four/2010/04

Tom in Colo