Reaffirmation Agreement Question?

[dirkdigler]

Hello everyone,

I received a reaffirmation agreement from Ally/GMAC Financial today about my car, I owe them $4,500 and the car is valued at $20,000.

If I'm understanding the packet correctly I have to go to court for the judge to approve me keeping my car or is it an agreement between me and Ally financial stating I will be responsible in paying the debt after discharge.

should I pay my attorney $400 to sign the reaffirmation agreement and they say I might not have to appear in court unless the judge orders a hearing

or should I go by myself to the hearing? if their even is a hearing.

and what do the judge ask you if their is a hearing?


thank you

[tcreegan]

Hi dirk,

There are two and a half paths to a reaffirmation:

(1) Your lawyer sends the papers to Ally/GMAC, gets them back, signs off on the reaffirmation and files it with the court.

(2) You send the papers back to Ally/GMAC and ask them to file them with the court. A hearing will be scheduled and you have to appear in front of the judge and explain why you can afford it. Here is where what was on Sched J is important. If you included the payment in Sched J, you explain that you have already budgeted for the payment and are about to pay the vehicle off, no problem. If you didn't include the car payment on Sched J, you have a much tougher job.

(2 1/2) If push comes to shove and the BK judge denies the reaffirmation you can still sign a new contract with Ally/GMAC after the BK. They have restrictions on calling you, so you need to be the one who calls them and asks for new contract, sets everything up.

Whatever you do, be proactive on this. Stay current on the payments and stay in contact with Ally/GMAC

Good luck with this,

Tom in Colo

[justbroke]

(2 1/2) If push comes to shove and the BK judge denies the reaffirmation you can still sign a new contract with Ally/GMAC after the BK. They have restrictions on calling you, so you need to be the one who calls them and asks for new contract, sets everything up.

Unfortunately, a "new" contract after the BK could be considered a back-door reaffirmation and those are strictly forbidden. This would be the case where there is no "new" consideration and you're only redoing the terms of the existing contract. The only way to get a "clean" new contract, would be a "true" refinance. If the "terms" don't change (length of contract and APR), then it's nothing more than a back-door reaffirmation and could be challenged in the BK court.

So, if you do one of these, make sure it's a refinance with new terms. Personally, I might try to avoid it (back-door reaffirmation), especially since there is a lot of equity in this particular vehicle.

[tcreegan]

Hi all,

I figured that last option was half-baked....

Thanks for the clarification justbroke!

Tom in Colo