Attorney says our case won't be discharged unless we reaffirm??? WHAT???

[Dee]

We finally managed to talk to someone at the bank where our car is financed today. They said that they do not require a reaffirmation agreement and that we can keep the car as long as we keep making payments. However, when we called our attorney to tell him we talked to the bank and decided not to reaffirm, he said our case will not be discharged unless we sign the reaffirmation agreement. WHAT??? Since when would NOT reaffirming our car loan prevent us from being discharged if we intend on keeping the car??? He said the judge will want to see the agreement to make sure we can make the payments. Why would the judge care whether we can continue making the payments or not if we don't reaffirm???

Could this have something to do with the fact that our continued car payment helped push us into a negative DMI? If we didn't reaffirm, would that mean we would have to add that amount back in as disposable income? Wouldn't that put us into a catch-22, where we would have positive DMI without the car payment but the judge might not approve the reaffirmation if we show negative DMI? We have no intention of giving this car up. We only have 9 payments left and it's worth twice what we owe on it.

I need advice, please!!!

[SunshineGal]

Huh? The only rule I'm familiar with in the FL courts is that you must reaffirm or surrender the car. I believe this is actually up the lender, but the lender could go back and petition the courts to force you to reaffirm or surrender. Now, I'm sure mine will be an unpopular opinion, but we chose to reaffirm the car because we had equity, and because there were less than a years worth of payments. This also allows the lender to begin reporting again and keeps the positive tradeline on your credit report for 10 years from the date of the last payment.

Another thought is that the courts are pretty settled on the fact you can include secured obligations on the means even if you are surrendering because it's an obligation you are still responsible for. Could it be the schedule J pushing you over without the car payment?

Finally, I know that opinions vary between the judges...what 3 will allow the 4th one may not.

Wish I had some good advice for you, keep us posted as to what happens.

SG

Just wanted to ad that we nearly missed the deadline for the reaffirmation agreement and nothing was said about it affecting our discharge.

[debee]

He said the judge will want to see the agreement to make sure we can make the payments. Why would the judge care whether we can continue making the payments or not if we don't reaffirm???

There's a section on the reaffirmation agreement where your lawyer will indicate whether reaffirming the debt will cause you an "undue hardship". This is defined by your DMI and/or equity position. If your DMI is negative including the payment, it's undue hardship. If you're upside down, it's undue hardship. That means you will have the hearing and the judge will give you/your lawyer a chance to rebut the "undue hardship" thing. The only rebuttal that I'm aware of is having a third party (like parents) say they will make the payment for you. So it looks like your lawyer is saying you need to sign the agreement, but he won't sign it, then it goes to hearing where the judge won't approve it either. Since your lender doesn't require the reaffirmation, you end up exactly where you want to be: no reaffirmation agreement, but in a "Stay and Pay" with the expense being allowed in your budget. You can talk to your lawyer and ask him if this is how he sees it being played out.

An exception would be a credit union. If your lender is a credit union there is no need to consider the "undue hardship" thing. If you sign it, it gets entered.

[Dee]

There's a section on the reaffirmation agreement where your lawyer will indicate whether reaffirming the debt will cause you an "undue hardship". This is defined by your DMI and/or equity position. If your DMI is negative including the payment, it's undue hardship. If you're upside down, it's undue hardship. That means you will have the hearing and the judge will give you/your lawyer a chance to rebut the "undue hardship" thing. The only rebuttal that I'm aware of is having a third party (like parents) say they will make the payment for you. So it looks like your lawyer is saying you need to sign the agreement, but he won't sign it, then it goes to hearing where the judge won't approve it either. Since your lender doesn't require the reaffirmation, you end up exactly where you want to be: no reaffirmation agreement, but in a "Stay and Pay" with the expense being allowed in your budget. You can talk to your lawyer and ask him if this is how he sees it being played out.

An exception would be a credit union. If your lender is a credit union there is no need to consider the "undue hardship" thing. If you sign it, it gets entered.

Not a credit union - it's with Suntrust. I was really hoping to keep from having to go before a judge - I'm totally tapped out on time-off from work. Talk about "undue hardship"! Lol

We are not upside down - we have about $8k in equity, but we do have negative DMI on our schedule J with the car payment included, so I'm thinking your logic is right about how it will play out.

[debee]

Not a credit union - it's with Suntrust. I was really hoping to keep from having to go before a judge - I'm totally tapped out on time-off from work. Talk about "undue hardship"! Lol

lol. Yeah, it's a pain but you're close to the end. Almost there, Dee.

[SunshineGal]

Dee,

If the attorney signs off on the reaffirmation agreement than there won't be a hearing. We were also in the negative and the attorney just stated something about reducing other expenses to budget for the payment.

[despritfreya]

. . .when we called our attorney to tell him we talked to the bank and decided not to reaffirm, he said our case will not be discharged unless we sign the reaffirmation agreement.

I am not aware of any provision in the Code that would preclude the entry of a Discharge if you fail to act on the Statement of Intentions. One has nothing to do with the other. On the other hand, the Code requires you to enter into the Agreement before the entry of the Discharge. This alone implies that failure to sign on the dotted line does not hold up the Discharge.

Ask your attorney what Code provision states that if you do not sign you do not get a Discharge.

Des.

[dumpinmydebt]

Your attorney sounds like an idiot. No offense to you, but really, he must be confusing the fact that if you get discharged, you cannot enter into a reaffirmation agreement. But it's not the opposite. Not signing a reaffirmation will not hold up your discharge.

Don't sign it and then laugh in his face when you get your discharge. You are making a wise decision to not reaffirm, especially since your loan company will let you keep the car as long as you pay on time. You can keep it as long as you want, and then when you are ready to let it go, you can do so without consequence.

[tcreegan]

Hi all, Hi Dee,

Did either your attorney or Suntrust file a reaffirmation agreement in the BK court? That would trigger a reaffirmation hearing which could delay discharge until after the hearing. But just delay, and your lawyer should be able to get out of this anyhow. If you do end up going to the hearing, you say we changed our mind, not reaffirming. You're outta there, discharge on the way...

Neither the means-test nor schedule J require a reaffirmation, the means-test is info before you even get the chance to reaffirm, and Schedule J is forward-looking, reasonably anticipated expenses...and it sounds like you reasonably anticipate making the payment.

When Congress wrote the new BK law, they made it very clear: reaffirmations are strictly voluntary. period.

Tom in Colo

[IBroke]

I am not aware of any provision in the Code that would preclude the entry of a Discharge if you fail to act on the Statement of Intentions. One has nothing to do with the other. On the other hand, the Code requires you to enter into the Agreement before the entry of the Discharge. This alone implies that failure to sign on the dotted line does not hold up the Discharge.

Ask your attorney what Code provision states that if you do not sign you do not get a Discharge.

Des.

Yep, I can confirm that since my auto-loan I actually WANTED to reaffirm wasn't reaffirmed but - surprise- I'm discharged now...

[Dee]

Update

Good Morning, All!

Well, had a discussion with our attorney yesterday and it seems this all got messed up in communication between me telling my husband what to ask and then him translating back to me (I know, that NEVER happens in anyone else's household, right? ).

Sooo...no, we do NOT have to reaffirm to get a discharge. But I talked with Suntrust again yesterday and they said that if we do reaffirm they will take our case out of their BK department and start positive reporting again on our credit reports. Since our scores are in the toilet right now, it looks like we are going to go ahead and reaffirm so that we can at least have one account reporting a positive payment history. It will be the ONLY open account on our credit report after the BK, so hopefully it will help our scores come up a bit - not that we're going to run out and get more credit or anything, but hubby is still looking for a job and I know some employers do pull credit scores. I'm not worried about being able to make the car payment for the next 9 months and the attorney is willing to sign off on the reaffirmation, so I'm not really seeing a down-side. Am I missing anything?

[SunshineGal]

Hi Dee,

Again, an unpopular opinion on the board, but also chose to reaffirm the car loan. There was less than 1 year remaining, we had equity in the car, and a positive trade line for a major installment line will help your credit score. It will also remain on the credit reports for 10 years from the date of last payment because it's a positive tradeline.

Hope this helps.

SG