I went through my hearing for a car loan reafirmation on Monday, and I wanted to share the info with those that have not gone through it yet.
Some details: My wife and I are a chapter 7 no asset case. We are reafirming a car loan with BB&T bank. Before everyone goes nuts about the pitfalls of reafirmation and why we should never do it, our reasoning is as follows:
The vehicle is in excellent condition and 2 1/2 years old.
We owe $3900 and the value is $9500
We have a (very affordable to us) $225 payment for about 1 and half years.
And family has already pledged to pay it off should we have an issue.
Based on this it seemed like a very low risk to reafirm, and a greater risk to not and have them come get it even though we keep paying. It was just not worth losing this particular vehicle. I really wish they would change the law to allow stay and pay for vehicles they way they do for houses. The current rule allows the lenders to bully the debtors with reposesion even though payments have been current and will continue to be current, but thats another story
So heres what happened. We arrive at the courthose 30 minutes early and sat down. For the next 30 minutes lawyers filled in and out speaking to one another and the court clerk. The clerk read off a list of cases and when he came to ours asked if we were present, which we indicated we were. We have an attorney, but I elected to not give him any more money to represent us for such a cut and dry hearing, so we represented ourselves. After this reading off of the list the clerk said he would return with the judge.
We waited for 10 minutes and the judge entered. She called all of the reafirmations first, and asked everyone some very simple questions:
1. Why are you reafirming?
2. Are you doing this of your own free will?
3. Do you understand what reafirmation means?
4. Do you understand the consequences of defaulting on a reafirmed debt?
She then went on to explain to every debtor that should she approve the reafirmation, they would be responsible for the payments. Should they default they could be sued for the remaining amount with no protection from the bancruptcy court. She asked everyone if they understood.
She then reviewed the debtor's financial situation and the terms of their particular reafirmation and made a ruling. The entire proscess for each debtor took no more than 5to 10 minutes. It seemeded to me that the judge was looking for the following to approve the reafirmation:
1. Less than 2 years of payments, with a payment that fit easily into your budget.
2. A vehicle that was fairly new, and worth alot more than was owed to the lender.
3. A debtor that had some sort of contingency plan in case they lost their income. She accepted help form parents, selling the vehicle, or using savings to pay off the loan.
Anyone not meeting these requirements was almost immediately denied. There were even people who had 2 loans they were trying to reafirm where one lone was and the other was not.
The most encouraging thing I saw was that to all the debtors who were denied, the judge noted on their case that she awknowledged they had made every attempt to reafirm, and the denial could not reflect negatively on them. She told them they could continue to stay and pay with no recourse for the lenders to reposses. She also explained that they would not be protected should they fall behind on payments.
I hope this post helps some of you. We were approved based on the above circumstances, and are relieved we will not be losing this vehicle, as we really need it for work. If anyone has any questions, I will do my best to answer.
Some details: My wife and I are a chapter 7 no asset case. We are reafirming a car loan with BB&T bank. Before everyone goes nuts about the pitfalls of reafirmation and why we should never do it, our reasoning is as follows:
The vehicle is in excellent condition and 2 1/2 years old.
We owe $3900 and the value is $9500
We have a (very affordable to us) $225 payment for about 1 and half years.
And family has already pledged to pay it off should we have an issue.
Based on this it seemed like a very low risk to reafirm, and a greater risk to not and have them come get it even though we keep paying. It was just not worth losing this particular vehicle. I really wish they would change the law to allow stay and pay for vehicles they way they do for houses. The current rule allows the lenders to bully the debtors with reposesion even though payments have been current and will continue to be current, but thats another story
So heres what happened. We arrive at the courthose 30 minutes early and sat down. For the next 30 minutes lawyers filled in and out speaking to one another and the court clerk. The clerk read off a list of cases and when he came to ours asked if we were present, which we indicated we were. We have an attorney, but I elected to not give him any more money to represent us for such a cut and dry hearing, so we represented ourselves. After this reading off of the list the clerk said he would return with the judge.
We waited for 10 minutes and the judge entered. She called all of the reafirmations first, and asked everyone some very simple questions:
1. Why are you reafirming?
2. Are you doing this of your own free will?
3. Do you understand what reafirmation means?
4. Do you understand the consequences of defaulting on a reafirmed debt?
She then went on to explain to every debtor that should she approve the reafirmation, they would be responsible for the payments. Should they default they could be sued for the remaining amount with no protection from the bancruptcy court. She asked everyone if they understood.
She then reviewed the debtor's financial situation and the terms of their particular reafirmation and made a ruling. The entire proscess for each debtor took no more than 5to 10 minutes. It seemeded to me that the judge was looking for the following to approve the reafirmation:
1. Less than 2 years of payments, with a payment that fit easily into your budget.
2. A vehicle that was fairly new, and worth alot more than was owed to the lender.
3. A debtor that had some sort of contingency plan in case they lost their income. She accepted help form parents, selling the vehicle, or using savings to pay off the loan.
Anyone not meeting these requirements was almost immediately denied. There were even people who had 2 loans they were trying to reafirm where one lone was and the other was not.
The most encouraging thing I saw was that to all the debtors who were denied, the judge noted on their case that she awknowledged they had made every attempt to reafirm, and the denial could not reflect negatively on them. She told them they could continue to stay and pay with no recourse for the lenders to reposses. She also explained that they would not be protected should they fall behind on payments.
I hope this post helps some of you. We were approved based on the above circumstances, and are relieved we will not be losing this vehicle, as we really need it for work. If anyone has any questions, I will do my best to answer.
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