Car reaffirmation, DMI & impact on credit

[daylate]

Title sounds like a Mighty Carnac answer......the question is:

I have a three year old car with about 32k miles-it runs like a top-slightly underwater on it.
I was planning on reaffirming my car loan because I want to keep it but (as always) things came to my attention that require some additional thinking.

If I don't reaffirm and I continue to make payments nothing gets reported to credit bureaus therefore no help to rebuilding credit?-true?

I can't reaffirm if I have negative DMI-true? or does this depend on judge?

I can make my DMI swing a lot by not including(or minimizing) things like medical or clothing or entertainment, etc. But I'm not sure I can make it break even without the car payment. However if I don't reaffirm the car can I include the payment-without it I worry about having positive DMI.

One attorney I spoke to said he would use IRS standards for things like rent,utes,etc and get to a slightly positive dmi so car could be reaffirmed. But from things I've read here that doesn't sound legit.

Help!?...

[nceguyfromne]

My attorney (purposely) did an exact break-even DMI on my petition and no one batted an eyelash at it. My entire case went smoothly and I reaffirmed 2 vehicles. The reaffirmations added about 3 extra months to my "60 day", though.

If you have negative DMI you may end up having to go to a reaffirmation hearing, but all the judge is really looking for is that you have a plan to repay. One good way to do that is to demonstrate that you've been keeping up on the payments since you filed. Absolute worst-case scenario, judge says no and you keep the vehicle without reaffirming it. In fact, in some appellate districts, filing the reaffirmation and having it denied by the judge affords you all the same rights as doing an actual reaffirmation, but without the responsibilities. Since you filed the reaffirmation in good faith and it was denied through "no fault of your own," the lender could not, by law, repossess your vehicle... unless you fall behind on payments, of course. It's a variation of the old "ride-through" loophole. Even if that's not the case in your district, though, lenders rarely have any interest in repo'ing a vehicle when someone is willing to pay for it, regardless of reaffirmation.

But like you said, if you can reaffirm and know you'll truly be able to afford it and finish out the loan successfully, then it's to your benefit. It may improve your chances of doing business with that same bank in the future, which for people in our situation is a bridge you don't want to burn if at all possible.

Good luck!

[debee]

If I don't reaffirm and I continue to make payments nothing gets reported to credit bureaus therefore no help to rebuilding credit?-true?

Some people on the forum have had problems getting the lender to report to the credit bureaus even with a reaffirmation. If you end up reaffirming, you might want to have it written into the agreement that you will get the positive reporting.

I can't reaffirm if I have negative DMI-true? or does this depend on judge?

My understanding is that if the lender is a credit union and you are represented by an attorney, the reaffirmation will get entered even with negative DMI.

Otherwise, as nceguy says, you can mount a rebuttal.

However if I don't reaffirm the car can I include the payment-without it I worry about having positive DMI.

Yes, you can include the payment. Indicate "reaffirm" on your Statement of Intentions, but don't file a reaffirmation agreement. To be sure you can keep your car this way, call your lender and ask them what their policy is regarding bankruptcy and reaffirmations. If you don't want them to know you are contemplating bk, don't call from home because your account is probably linked to your phone number. A lot of lenders don't require reaffirmations.

One attorney I spoke to said he would use IRS standards for things like rent,utes,etc and get to a slightly positive dmi so car could be reaffirmed. But from things I've read here that doesn't sound legit.

I don't think I would falsely lower my rent or any other fixed expense, but there's nothing wrong with juggling the other things around - most of us do that on a month-to-month basis anyway.