I need help with reaffirmation problem! Please!

[jcmmoore]

I am so incredibly frustrated over this situation. We had our 341 meeting in October. On November 6, we went to our lawyers office to fill out reaffirmation paperwork on our car. We filled it out with the paralegal, and was told it was mailed out 2 days later. I called last week to find out if they had received it and they said no, but to give it a few days and call back. I told the guy that I was nervous, because I knew our case was close to being discharged. He assured me that we could still reaffirm the loan after it was.

So today I call them back to ask if they received it yet from our lawyers office. She said that they did, but they had been emailing back and forth with the paralegal for several days now because our lawyer didn't sign the reaffirmation paperwork. He said he wouldn't because the interest rate they were offering us was way too high (23%, what it was prebankruptcy). They said okay, renegotiated our interest rate to 13%, and supposedly sent out new paperwork to the lawyer. Well, our lawyer said they never received it. So I called back to the car loan company to request they fax in another copy of the reaffirmation agreement. She then tells me she can't do that, because our bankruptcy has been officially discharged. And since paperwork was never signed with us agreeing to the 13% interest rate, she can no longer offer that to us. But we can still reaffirm at 23%.

Is that even possible without or lawyer never signing the 23% paperwork? Can anything be done about this? I'm so incredibly frustrated that both the lawyer and the loan company dropped the ball and never followed through with this. Had I known this was happening, I would have stayed on top of things to make sure it was taken care of. Now, if we have to pay our loan at the 23% instead of the 13%, we are looking at $2500 extra because someone couldn't do their job.

Is there anything we can do? We are waiting on a call back from our lawyer who was in court.

[angel7821]

Sorry to hear this is happening to you. I can't offer any advice but I am sure the experts will be popping in soon to give you advice.

[LadyInTheRed]

You cannot reafirm a debt after it has been discharged in bankruptcy. Don't let the lender convince you otherwise.

You need to decide whether it is worth it to keep paying for the car according to the terms of the original loan or if it would make more sense to let the car go and replace it. If you decide it's not worth keeping it, stop making payments and drive it until they repossess it. Use the money you save in car payments as a down payment for another car. Or, if the lender is willing to refinance the car at a lower rate, you could do that too. It isn't the same as a reaffirmation, but it has the same effect of putting you back on the hook to pay any deficiency if you default later and they repossess the car.

[jcmmoore]

So say we stop making payments on the car to save up for a down payment. Doesn't that hurt our credit even more to start off a bankruptcy with a repo? We've owned this car for almost 2 years and were never late on a payment. The vehicle we owned prior to this was voluntarily surrendered, so I really don't want 2 repos on our credit.

[AngelinaCat]

If you have been making the payments on time, and have never missed one or been late, then all should be well, as what you are/have been doing is called a 'Ride-through'. Most of the time here, the advice is NOT to reaffirm a car loan.

Now, if you decide to surrender the car, call the lender and make arrangements to have it picked up, or arrange a location where you may drop it off. A voluntary surrender looks beeter on your CR than in involuntary repossession. Make sure that you take pictures of it inside and out, and hae the person picking it up, do a 'walk-around' with you to inspect any dings or nicks. Get a signed receipt from that person stating that this was done, and the vehicle is in ___________ condition.

Good luck to you.

[basketsbears]

I thought that since the car loan is not reaffirmed, then it would just show up incl. in BK - and the repo would not show up at all.

Am I mistaken?

[jcmmoore]

Thanks for your help so far.

My husband was able to talk to the lawyer, and he said there was nothing he could do to get us the 13% rate. He says he sees finance companies do this all of the time- make an agreement for the finance charge, and then wait around sending the paperwork until the bankruptcy is discharged, leaving us not to be able to do so our bankruptcy has been discharged and our loan was not reaffirmed.

He did suggest that we could stop making the payments and save that up for a down payment and wait for them to come and get it as was suggested here. We asked about it hurting our credit even more, and he said no, since the loan was covered under our bankruptcy, that they legally couldn't report anything negative about our payments if we decided to stop making them. Basically, it looks like we never had the car loan. Right now, we owe probably 2k more than what we could get for it trade in. So if we could definitely get a car loan with lower interest rate than 23%, we'd be stupid not to do so, right? As long as us choosing to surrender the car won't affect us negatively, right?

And can I ask why reaffirming isn't recommended?

Thanks for the help so far. I'm just so upset and frustrated over the whole situation!

[bcohen]

I thought that since the car loan is not reaffirmed, then it would just show up incl. in BK - and the repo would not show up at all.

Am I mistaken?

That is correct. If the car was repossessed before you filed for BK, the lender could continue to report that fact after discharge. But if they repo it now, they cannot legally report anything other than "account included in bankruptcy".

I second Lady In Red's advice. If the car is worth significantly less than you owe, then with 23% interest, it's probably not in your interest to keep paying on it. You are better off to quit paying, drive it for a couple months (maybe more, if you keep it in a garage) until the repo man takes it away,and then buy something else.

Now, if the car is worth close to what you owe, then even with the high interest, it's probably still in your interest to "ride through" and keep paying.

[AngelinaCat]

And can I ask why reaffirming isn't recommended?

The recommendation against reaffirmation is for when situations arise similar to this, where you find that you are unable--or no longer wish--to keep making the payment. You can walk away from this debt, and NOT be held liable for the difference between what you owe, and the amount that the cars sells for at auction. That amount, whatever it ends up being, was discharged in your Ch7 bankruptcy. The loan company cannot come after you, or else they will be violating the permanent stay that you gained when your discharge was granted.

If you HAD reaffirmed this debt, then you WOULD be held liable, and there would be nothing you can do about it.

It is time to start enjoying your New Financial Start.

[Drazil65]

Hi, our attorney purposely did not sign the "required" reaffirmation on our vehicle (we did not want to reaffirm but did to appease the car company at the time as it was required and atty did not sign) and as predicted the court did not accept the reaffirmation (so car company was SOL on the reaffirm). Do not reaffirm a car with 23% interest rate, as long as you keep paying they will just let it ride. You can then pay as long as you want and when you get another car or save for one then call the car company and tell them to come get it. They are playing with you to force your hand, don't fall for it. Good Luck!

[TBA]

So this got me thinking... I pulled my case and reviewed the docket - My reaffirmation was submitted by the lender before discharge - however - it was not approved until after discharged - my attorney also did not sign the agreement which forced a hearing a month after discharge - at which point the judge approved it (after a long lecture). I reaffirmed because i could afford it, i had a low interest rate (5.6%), and had equity in the car which i purchased back from the trustee (turning my case into an asset case).

We did not reaffirm any other debt.

As for your situation, you have a few choices that have already been offered here. I would drive that car until they came to take it - and save up enough for a clunker until you can afford payments again. there was no reaffirmation agreement, so it cannot hurt your credit now as it will show iib, as others have mentioned. sure, it may not have ac or a working radio, but it will do what cars are supposed to do - get you from point a to point b.

GL!!!

[jcmmoore]

I spoke with the loan company this morning, and he told me that if the loan was not reaffirmed, then they would repo the vehicle. He said they do not "pay and ride". He was SO hateful to me! He said at this point, our only option is to reopen our bankruptcy case so we could reaffirm. He would bring our account current for January so that we could use the amount for Decembers payment to pay court costs to reopen our case.

I just want to cry. I had fully intended on paying until a few months had passed to keep them off us (and keep our car safe), see what another dealership could do for us as far as approval and percentage rate, and go from there. There would be no point to pay them and still have them take our car. I asked him what the likelihood of them taking it was even though we were paying on time (and have ever since we got the loan) and he said 98%. Ugh.

So WWYD? Pay to reopen so we can file a reaffirmation agreement and hopefully get the 13%? Or just cut our losses, and hope and pray we can get a decent car without a huge down payment (we could save about 1000 by the end of January) and affordable financing. What is the likelihood of that happening?

[LadyInTheRed]

A reaffirmation agreement must be entered BEFORE discharge. See 11 USC § 524(c): http://www.law.cornell.edu/uscode/text/11/524. Even if reopening the case would allow a discharge, the cost of doing that is hardly worth the possibility that the creditor will agree to a lower interest rate. If they wanted to agree to a lower rate, they would have sent the reaffirmation agreement to your attorney.

Don't take the advice of the loan company. They do not have your best interests in mind. The person you are speaking to may not even be telling you the truth about a ride through, but you probably shouldn't count on that. Prepare for the worst. Your attorney told you your options. It's time to make a decision.

To find out your chances of financing, you need to check with lenders. Many people report getting very reasonable rates right after a BK discharge. Try CapitalOne Blank Check or go talk to some dealers. If you can't get financing, spend the $1,000 on a beater until your credit rating improves.

[AngelinaCat]

The loan company is feeding you a load of horse *squeeze*.

You attempted to reaffirm the debt, but the situation was out of your hands. This is the same as if your reaffirmation paperwork was denied by the judge in your case. Some judges do rule against a reaffirmation as being "an undue hardship". The attempt satisfied the lender's requirement, but you had no control over the outcome.

I would talk to your attorney about this lender. There should be some sanctions possible against this lender.

[bcohen]

I spoke with the loan company this morning, and he told me that if the loan was not reaffirmed, then they would repo the vehicle. He said they do not "pay and ride". He was SO hateful to me! He said at this point, our only option is to reopen our bankruptcy case so we could reaffirm. He would bring our account current for January so that we could use the amount for Decembers payment to pay court costs to reopen our case.

I just want to cry. I had fully intended on paying until a few months had passed to keep them off us (and keep our car safe), see what another dealership could do for us as far as approval and percentage rate, and go from there. There would be no point to pay them and still have them take our car. I asked him what the likelihood of them taking it was even though we were paying on time (and have ever since we got the loan) and he said 98%. Ugh.

So WWYD? Pay to reopen so we can file a reaffirmation agreement and hopefully get the 13%? Or just cut our losses, and hope and pray we can get a decent car without a huge down payment (we could save about 1000 by the end of January) and affordable financing. What is the likelihood of that happening?

So then STOP PAYING and try to hide the car from the repo man for a couple of months (park it in a locked garage, don't drive it to work, etc.) Then when you've saved up 2 or 3 payments, tell them to come get it, and go buy something else.