Reaffirmation of an auto loan

[AlmostAmos]

Well, my .02. I keep reading all of this talk about high car payments, denied reaffirmations, luxury cars, etc., and it is making my head hurt. I worried about my situation 20x over before I filed and had 0 (yes, zer0) problems.

I was a high income ($400 under median income) CH 7 no asset case. I had two car payments - $420/mo (4 years, 17k left, with a CU) and $733/mo (5 years, 43k left, with FORD). I purchased BOTH cars within 6 months of filing BECAUSE I was going to be filing. I wanted to get my transportation lined up first. On my SOI, I selected that I intended to reaffirm BOTH auto loans (along with my boat!). The Trustee did not SAY ONE WORD about this during my 341. He said "you intend to reaffirm car1, car2, and your boat, correct"? I said, "yes sir, I do". He said "ok" and moved on to the next case.

After my 341, my attorney told me he would NOT sign the reaffirmations as he could not do so in good faith. We were $150 or so negative DMI. So, we worried some more. He assured us he knows what he is doing and said that the local judge will NEVER let Ford (or the CU for that matter) repo it if we were to keep current. He said I stated my intention and followed through with it by signing - that I cannot help the fact that my attorney (or the judge) will NOT sign off on reaffirmations when having a negative DMI.

In my case, I did not reaffirm either of my cars nor my boat ($189/mo). I'm letting the boat go even though I originally wanted to keep it. The cars, I'm keeping both.

[joh]

reaffirming a loan that big is foolish

[ironpirate]

I bet the car is an Escalade

[tcreegan]

Hi all,

IBroke....9 payments left, value = loan, payment $300...that is a 'gimme' If the judge doesn't approve that they need their head examined....

Tom in Colo

[IBroke]

Hi all,

IBroke....9 payments left, value = loan, payment $300...that is a 'gimme' If the judge doesn't approve that they need their head examined....

Tom in Colo

Thanks - that's good to know!

[gman]

I have almost -$4,000 in DMI on Schedule J...so a judge signing off on a reaffirmation for me is unlikely.

I am current on my loan and am likely to keep the car (it has equity) and make payments via family members if need be. I am currently unemployed.

So, I have read a few case opinions where it makes sense to simply ask for a reaffirmation, expect to get denied, and keep the car anyway. (Note: Ford Credit seems to be the exception to this rule - as they repo if there is no reaffirmation.)

I called my credit union. They CONFIRMED my assumption. As long as I make payments, they are not interested in doing a repo. The rep said they cannot put this in writing.

Takeaways:

1. Make sure you TRY to reaffirm.

2. Call your bank/credit union and speak with someone in the "bankruptcy" department to understand what their own policy is in regard to car loans that are current but cannot be reaffirmed. Make sure they understand the judge may be the one blocking your reaffirmation request...not you.

Some people call this approach a "back door ride through" or a "back door pay and ride." You can Google these terms for more info.

[wnguyen]

Hi Michelle

I understand your concern because I'm in the same boat as you are except that my payment is not that high. Today my lawyer told me that I didn't have to reaffirm the loan. To me those words sound much more than music even though I think I can (and must) afford it. I don't know much about your situation but my best advice (I'm not a lawyer though) to you is if you're not behind on your payments, then keep making the payments and DO NOT reaffirm if you're allowed to do so. That's what I'm doing. If you bought your vehicle thru Ford credit then you have no choice but to reaffirm, otherwise they'll take your car. This is a stupid decision by Ford.

[NoMoreCards]

If you bought your vehicle thru Ford credit then you have no choice but to reaffirm, otherwise they'll take your car. This is a stupid decision by Ford.

To reaffirm a large debt after filing BK, is a stupid decision by the customer IMHO, not the company that can get people to do so. We are in charge of our financial futures!

[wnguyen]

Did you read that statement of mine carefully or did it confuse you? I should've made it clearer like this:

If you bought your vehicle thru Ford credit then you have no choice but to reaffirm, otherwise they'll take your car. Repossessing your car is a stupid decision by Ford.

[AlmostAmos]

...If you bought your vehicle thru Ford credit then you have no choice but to reaffirm, otherwise they'll take your car. Repossessing your car is a stupid decision by Ford.

Well, I have a fairly new loan with Ford (March of 2010) with a balance of $42k. I did NOT reaffirm it as per the recommendation of my attorney and the BK judge in our district. They both said Ford can't do anything about it as I offered to sign it but could not do so as they (the attorney/judge) could not sign it in good faith. We'll see how that works out.

[ladycee]

Hi All,

@gman and others thanks for the good advice. I have $5,865 left to pay on 2006 Toyota Corolla, valued trade-in at $8,024 tho Kelly BB shows retail at $12,000+ car only has 18,000+ miles. Loan will be paid off March 2012. My atty also told me that I don't have to reaffirm, but Toyota sent ltr to atty giving me 3 options ....surrender, redeem, reaffirm. (after convert to Chap 7, for Chap 13 their ltr was different it did not refer to the 3 options) Toyota's ltr states that I can reaffirm and in the "interim" until the reaffirm is processed, I can continue to pay...

I am interpreting this to mean that I can only ride through temporarily waiting for Reaffirmation to go thru.

I asked the atty and he said I do not have to Reaffirm, that as long as I am current they will not repo....he says that Toyota does not really like to repo. Pointed out to him that Toyota's ltr says different, he explained that Toyota is a "national" company and they are not aware that there is a law in PA that stops them from repoing if I am current. That different state laws apply to this situation differently.

Have had problems with this atty from Day 1 and have to double check everything he does, and been asking him to let me *see* all amendments before they are filed.....good thing too......kept finding more and more errors. Even now, just found another error on Schedule C. So I am really worried that they might come and take my car. He says he has no problem approving Reaffirm, but he did not contact Toyota for it ..... so I did myself.....young lady there just faxed it to his office today.

Way below Median Income....car payment $287/month.

My 341 is next week 10/6......so my question is: If Trustee does not approve the Reaffirm, do you get a warning from Toyota if they plan on repoing the car? What a mess.....no way can I afford to get another car. I live in the mountains....no public transportaton at all. And if they do give me a warning, I would probably convert back to a Chapter 13 cause I just cannot afford to get a used car. Toyota was much more pleasant with me under Chapter 13.

what say you guys?

Chris

[wnguyen]

Well, I have a fairly new loan with Ford (March of 2010) with a balance of $42k. I did NOT reaffirm it as per the recommendation of my attorney and the BK judge in our district. They both said Ford can't do anything about it as I offered to sign it but could not do so as they (the attorney/judge) could not sign it in good faith. We'll see how that works out.

Good luck. I don't have that much on my loan ($26K) but I'm not reaffirming. One thing I know is that it happened to a friend of mine. After the discharge, Ford took her vehicle even though she was perfect on her payment.

[ccsjoe]

Well, I have a fairly new loan with Ford (March of 2010) with a balance of $42k. I did NOT reaffirm it as per the recommendation of my attorney and the BK judge in our district. They both said Ford can't do anything about it as I offered to sign it but could not do so as they (the attorney/judge) could not sign it in good faith. We'll see how that works out.

AlmostAmos, I have the same date loan with Ford with balance of 28.5K yet my attorney told me that if I wanted to keep it there was no negotiating with Ford, we needed to reaff...to the point where he won't even charge me to sign. I'm wondering if MN has some caselaw where what your attorney pointed out is reflected and if it could be applied to CA.

[wnguyen]

Hi ladycee

I talked to my lawyer before filing that I wanted to keep the car. At that time I didn't know any options at all. About 2 days after filing, Toyota sent my lawyer a letter saying that I had only 3 options. Two weeks ago, I called them to start sending me the statements again after discharge and they said that if I want the statements to be sent to me again, I would have to reaffirm. I told them that I didn't want to reaffirm, just keep paying on time every month, would they take my car. The gentleman said no. I asked him one more time just to make sure and he said as long as I'm current, they won't take it. And last week they sent my lawyer the reaffirmation. I was upset and called my lawyer this morning and she said just disregard it and keep making monthly payment, they won't take it. That's my story

[wnguyen]

ccsjoe, I think he/she's in VA, not MN.