I was reaffriming my Toyota on my Chapter 7 filling. Do I have to?

[diesillady]

I got a call from Toyota Finance before my 341 hearing that they require me to reaffirm my car. They will send me the paper work after the first of the year. My question is can I pay the car off instead of reaffirming it. I prefer this route as the car value is close to $4500 and it is my only car. Plus I want my title free and clear with no chance of repossession. My payment are $285 and last statement I got was 9/2010 balance was $2400. I've made three more since then. I pay it through my bank bill pay service just as I've been doing since I got the car. I want to not sign the paper and have to go to another hearing. The pay off date is May 2011 but I can pay it off next month. Will this be legal or should I reaffirm it and just make the next 5 month payment as agreed and will it help my credit score going forward If I do reaffirm? I have another car with Santander that I will surrender after my discharge I have stop paying for it as of this month payment.. I file pro se so no lawyer to ask.. Any help greatly appreciated..

[justbroke]

Do not pay this car off until you consult your attorney and make sure that a.) you are using exempt funds, and b.) there aren't defects in the title that the Trustee will poke at.

[diesillady]

Do not pay this car off until you consult your attorney and make sure that a.) you are using exempt funds, and b.) there aren't defects in the title that the Trustee will poke at.

Exempt fund?
1. I have my paycheck coming in as my only income. I report that figure when I filed and showed my paycheck stubs so they knew my take home pay. The money to pay off car will be coming form my paycheck. I now have a reduction in my overhead, monthly expense are lower by one third. I have more than enough ready cash now to pay the car off. At the time of my BK filling my checking and saving was >$200 in each. So this is only my income earnings since the BK petition was filed.
2. Why would there be defects with the title I'm the original owner of the car?
3. I am pro se, no attorney to ask that is why I ask for advice on here

[justbroke]

Exempt fund?

I was worried that you had a bunch of cash stuffed in a bank account and were going to use that money!

1. I have my paycheck coming in as my only income. I report that figure when I filed and showed my paycheck stubs so they knew my take home pay. The money to pay off car will be coming form my paycheck. I now have a reduction in my overhead, monthly expense are lower by one third.

This is excellent because money that you earn "post-petition" is not property of the estate. I was worried that you had thousands of dollars stashed somewhere and the Trustee would definitely be interested in where it came from and how you exempted it.

2. Why would there be defects with the title I'm the original owner of the car?

Because the lender/creditor didn't file the paperwork properly!

Please be aware that your income tax refund may be at risk unless you exempted it. If you have been planning to use your income tax refund to fund any of this, you may quickly learn that the Trustee wants your refund if you have not exempted it. If all this is not making sense, then you probably didn't exempt your "anticipated" 2010 refund and the Trustee is likely to seize it as property of the estate.

Fortunately for you, you are in California and if you don't have a homestead, System 2 has a wildcard exemption of over $22K that should be able to cover everything that you have mentioned.

Since you are already post-341 and you post that you already have a report of no distribution, I'm thinking you are in the clear anyhow, since the Trustee found that you have no assets to distribute. Congratulations.

Back to your original question, yes, you need to reaffirm the debt or redeem. I think that you'll redeem by paying it off, right? You'll need to do this by the time of the discharge which looks like it will be around 2/9/2011, right? Generally speaking, though, most lenders won't repossess on a non-reaffirmed/redeemed debt when you only have 5 months of payments left. You should call them and talk to them to make sure. By them, I mean the creditor for the car (Toyota Motor Finance).

[diesillady]

Yes I did included my 2010 tax refund and exempted it with the wild card (b) option so it should be mines free and clear. I exempted this car as well because my equity was over the limit allow for a vehicle in Ca.. One thing has me stuck and that is redeem vs reaffirm. My reading of the law, redeem mean I pay the fair market value for the car which in my case is higher than the balance owed to TFS. So my worry was if I sent them a payment for the balance app. $1450 and Do not sign the reaffirmation paper they counter as it was redeem and there fore I owe the FMV of the car. Tell me is my head just to twist with this BK process or am I seeing shadow where there aren't any. lol

[justbroke]

Redemption is either pay the full market value or the balance, whichever is less. If you only have 5 months left, I would personally contact the creditor and ask if a ride-through is okay. You will need to make sure you're talking to their bankruptcy department and not just "any" customer service rep.

[Charlie777]

I believe you really must work with your attorney on this. Toyota Finance may take the position that your BK filing itself is an "event of default" and assert the right to repossess if you don't reaffirm. It's excellent that you believe you can pay the loan off quickly, and vital that you continue making payments during the BK, but if so, and given only 5 monthly payments left, why not reaffirm? Remember, you can only reaffirm with court permission (and you essentially need your attorney's concurrence), and must get the reaffirmation approved before your discharge.

The ability to "drive thru" varies by court district and state, and Toyota is pretty stupid in what they do, don't risk them repoing your car because the insist on a reaffirmation and you didn't get it done before discharge.

[diesillady]

I'd prefer ride through of course but since they TFS stated a need for reaffirm that option is not there.

"It's excellent that you believe you can pay the loan off quickly, and vital that you continue making payments during the BK, but if so, and given only 5 monthly payments left, why not reaffirm?'

Now one other thing crosses my mind reading your opinion. If I pay three payment this month (due on the 28th) and next month pay three more, the car should then be paid off. Thus no need for reaffirm the loan as the balance will be extinguish. What, if any consequence do you think might be there if I follow this strategy?

PS Not trying to avoid any BK laws. I want to do which ever is the proper and legal method that benefit me most.

[Charlie777]

At least theoretically, as soon as your case is closed they could repo the car. Let's hope they aren't that stupid, but if you'll have two or three payments left at discharge, why not reaffirm to let them check off a mark on their checklist and avoid any chance...

I had a Ford Credit loan that finished during my case, Fod is also noted for taking a hard line on drive thrus. I had a Toyota lease that wasn't reaffirmed and they messed up asking for a reaffirmation and were generally a pain.

[Egr61]

I have a car loan through TFS. I've been discharged, and I never heard anything from TFS about reaffirming. My attorney was against reaffirming anything. He didn't think TFS would repo the car, partly because I only owe $1200. I called TFS, and they said they've been receiving my payments. They didn't give me any indication that they were considering repo'ing the car, though I didn't specifically talk to the BK department.