Auto Question

[Dj1995]

Initially we had planned to retain our car, no reaffirm. What happens if that changes and we surrender it? Can we do that after filing? Will we still be liable for the loan or will it be discharged?

[debee]

So long as you list the debt in your schedules, do not reaffirm, and receive the discharge, then you are free to decide to stop "retain and pay" at any time and the lender's only recourse will be to come and get the car. You will not be liable for the loan. It will be included in the discharge.

[Dj1995]

Even if they come get the car before the discharge?

[disconapper]

Even if they come get the car before the discharge?

I am in the same situation, I listed re-affirmation on the petition but almost right away decided not to reaffirm the debt. I have not had my 341 yet (its on the 31st) nor have I received a reaffirmation agreement from my Lender, though they were informed of my intentions to reaffirm. You would not be liable for the car even if they repossess before the discharge, they would need to file a relief from the automatic stay to do so though. As long as the car is properly listed on the petition you should be okay.

[debee]

Agree with the napper. The only way you would be liable for the debt is if you signed the reaffirmation (or failed to receive a discharge).

Lenders don't have to file a motion to lift the stay in order to repo personal property. If you don't perform your "intention" as stated on the SOI within 45 days of your 341, the stay is automatically lifted with respect to the collateral. The lender will be able to repo it, unless there is some provision in state law that prevents it. If the trustee had wanted it, he would need to timely file a motion to have you surrender it to him.

[Dj1995]

If they come and get the car before the discharge do we have to amend the schedules at all? We have had another drop in income since filing, and the car has some major mechanical problems which would make it almost impossible to keep. We will have to replace the car, so there will be another car payment.

[BoxerLover]

Agree with the napper. The only way you would be liable for the debt is if you signed the reaffirmation (or failed to receive a discharge).

Lenders don't have to file a motion to lift the stay in order to repo personal property. If you don't perform your "intention" as stated on the SOI within 45 days of your 341, the stay is automatically lifted with respect to the collateral. The lender will be able to repo it, unless there is some provision in state law that prevents it. If the trustee had wanted it, he would need to timely file a motion to have you surrender it to him.

Are you sure? My credit union said they'd have to go through the court procedures no matter what.

[disconapper]

Yes, I'm confused here as well. I thought the Automatic Stay protected the filer up through discharge.

[debee]

The stay terminates automatically with respect to secured personal property if an SOI is not filed, if one of the three "legal" options is not selected, and if retain/redeem is selected, if the debtor does not perform in timely manner.

This is from 11 USC 362(h):

"In a case in which the debtor is an individual, the stay provided by subsection (a) is terminated with respect to personal property of the estate ... and such personal property shall no longer be property of the estate if the debtor fails within the applicable time set by section 521 (a)(2)—
(A) to file timely any statement of intention ...and, if retaining such personal property ... (B) to take timely the action specified in such statement ... unless such statement specifies the debtor’s intention to reaffirm such debt on the original contract terms and the creditor refuses to agree to the reaffirmation on such terms."

The 45 days is from 11 USC 521 (a)(6) which states the debtor shall:

" ... not retain possession of personal property ... unless the debtor, not later than 45 days after the first meeting of creditors under section 341 (a), either—
(A) enters into an agreement with the creditor pursuant to section 524 (c) with respect to the claim secured by such property; or
(B) redeems such property from the security interest pursuant to section 722; and ... "

[disconapper]

Thanks for the information debee. I filed an intention to reaffirm my car. Although I'm probably not going to sign it. My lender has not sent the affirmation agreement yet, do I assume they will not come get the car until they at least send that and realize I'm not going to sign?

[debee]

Have you researched your lender, disconapper? Some don't bother sending them. Might be worthwhile for you to call your lender's bk department and ask about their policy. Most go along with 'retain and pay'. You could call anonymously and just ask on behalf of "a friend". I've done it myself and know others have as well. Just don't call from a number linked to your account if you want to remain anonymous. Then you won't have to guess at their intentions. You'll know.

I think it should be safe to assume they're not going to try a repo if they haven't sent a reaffirmation, but crazier things have happened.

eta: @dj1995 - You don't need to amend your petition if the creditor picks up the car.

[malf1204]

I would not enter into it. Maryland has a specific law dealing with closed end retail accounts that prohibits acceleration of the principle absent some sort of lack of payment. The MD Court of Appeals is currently considering the question of whether Ford Motor Credit could repossess an automobile post chapter 7 bk simply becuase the debtor filed bankruptcy. Ford Motor Credit Corporation v. Maureen P. Roberson. I think it will depend on your specific auto contract in MD. My Ally retail contract states that my loan will be accelerated and all monies due if I file bankruptcy but this would appear to be a prohibited under the Closed end retail contract law for MD.

[Dj1995]

If the car is picked up before discharge, will anyone try to object to our discharge because the payment was included in our schedules? We will have to replace the car, but I don't think we can do so until after discharge right? (Can't borrow any money before discharge?) This part is confusing to me, but I might still be thinking in the chapter 13 mindset.

[debee]

I agree that's it's confusing. Aside from the difficulty in finding a lender, I'm not aware of any prohibition in the code itself from borrowing during the pendency of a chapter 7. This is something you can confirm with your attorney.

Since the repo would not take place until after your 341, I don't see it causing you any problems as far as your schedules are concerned. Even if it did, you would be entitled to claim transportation expenses of some kind - whether a replacement car payment, bus fare, etc - so the missing payment wouldn't just create DMI. However, it doesn't. It won't. You're in the same position as all the filers whose lenders wanted reaffs & debtor wouldn't reaffirm. Lost the cars, but not their discharge. No impact on schedule.