Beginner's questions

[pacific22]

I may very well be starting the Ch. 7 process in the next few months. I'm meeting with some attorneys soon.

I have some questions that I really want answered and feel like there is enough experience in this group to get them resolved... Prove me right

1) If I choose to reaffirm a vehicle ($19k still remaining on loan), can the reaffirmation agreement act as a sort of "refinancing" of the loan, i.e. renewing terms, interest, etc? What would the bank prefer - to renegotiate the debt as a part of a reaffirmation or to repossess the vehicle?

2) If I know in advance that I will NOT reaffirm the vehicle, should I continue to make payments on it? And if I DO NOT make car payments to a bank that I also check with, is it possible for them to seize funds in my checking account? Or does that only happen with UN-secured debt?

Thank you

[LadyInTheRed]

The reaffirmation agreement can include modification of the terms of the loan, but I have yet to hear of anybody getting a bank to do that. It can't hurt to try to negotiate better terms. What the bank prefers, aside from you meeting your original obligations under the loan, is anybody's guess.

Whether you continue to make payments depends on whether you want to keep the vehicle. If your local court and lender allow, you can do a ride through where you don't reaffirm but continue to make payments until the loan is paid off. If you decide to stop paying later, you have the benefit of the discharge and can just let them come get the car. If you don't want to keep the car, you can stop making payments whenever you are prepared for the lender to repossess the car. You could wait until shortly before you file to stop making payments and then keep the car until after your BK is discharged, assuming the creditor doesn't go to the trouble of filing for relief from automatic stay.

If the car is worth less than you owe, you may also be able to do a redemption where you pay the car's value to the lender and get a discharge of the balance of the loan. But, the terms of the redemption financing may not be so great, but you may be able to refinance later.

[pacific22]

Thank you, Lady!

Still wondering whether a bank can seize your checking account funds for not paying car loan (secured debt)? I frequently use the same bank I took out the car loan from...

[TXskyblue]

Thank you, Lady!

Still wondering whether a bank can seize your checking account funds for not paying car loan (secured debt)? I frequently use the same bank I took out the car loan from...

What you are talking about is cross-collateralization. My understanding is that this is common for credit unions but not for banks. Since you said it's a bank, I would think they do not have the ability to take your checking account balance. However, why risk it? Keep $5 or whatever the minimum is for the account and open up a new account with an institute that you have never done business with before. Segregate your funds from your loans.