reaffirm vehicles

[santadawg]

what does that really mean & how does it work. We have two loans with a credit union on our cars. Plus I owe 5000. on a CC. I plan on a BK-7.
I am upside down on my wife's. 2005 pathfinder
She owes 18000. & she wants to keep it. Kelly BB says it's worth 10000. trade in value
mine is a 2001 chev p/u
I owe 5000. & it's worth around 5000

Thanks for the help

[liz417]

To reaffirm a vehicle (not recommended, btw) is basically to "guarantee to loan" which means that you will be responsible for remainer of the loan regardless of what happens in bk. Basically, to reaffirm on a loan only benefits the lender.

Are you only BKing on CC debt of only $5,000?!?

[JRScott]

Is the CC at the same place the vehicles are?

[b_girl]

I guess it all depends on what is the root cause of your filing BK. Something had to push you over the edge...usually it's a conglomerate of payments, as in our case. Our mortgages were reasonable, but the fact that we had 2 was one too many. The car payments were also reasonable, but combined with the CC payments and the extra mortgage they were just too much of a load for us. So if your car payments are the straw which broke the camel's back, better to face it now than later. Once you sign those reaff papers, you do have a certain amount of time to change your mind, but once that time has come and gone, you are on the hook for that loan for the life of the loan (or the next 8 years, whichever comes first.)

[santadawg]

we hope to go ch-7 in Dec. We owe 75 in CC. Mainly from borrowing peter to pay paul & keeping up with the Jones's. Also stupidly I took a promotion with no overtime. We owe 186 on first & 52 on the 2nd. It's worth around 285.

[BKParalegal]

Santa, Make sure that youir Credit Union ( they are famous for doing this) didn't cross collaterallize your Credit Card with your car loan. If they did do that with one or both of your loans, then I would look at trying to do a 722 redemption on your wife's car. That is where you pay the fair market value of a secured item rather than what is owed. You have to come up with the funds 60 to 90 days after the 722 is approved, but if you can scramble the cash it will save you a ton down the road.

Good Luck

[santadawg]

and yes, the two cars loans are with a credit union and we owe them 5000 on a CC with them. The rest are chase-13, elan-10, BOA-40, JCP-3, Sears Mast-6, A&E-1.

[BKParalegal]

The question is still if the Credit Union cross collateralized the CC with the cars.

[santadawg]

BK-I don't think they did collaterallize, but how would I know.

[PoorGrammyinBK7]

Santa, Make sure that youir Credit Union ( they are famous for doing this) didn't cross collaterallize your Credit Card with your car loan. If they did do that with one or both of your loans, then I would look at trying to do a 722 redemption on your wife's car. That is where you pay the fair market value of a secured item rather than what is owed. You have to come up with the funds 60 to 90 days after the 722 is approved, but if you can scramble the cash it will save you a ton down the road.

Good Luck

BKParalegal,

I am interested in doing the redemption on one of our cars. I have asked before, but nobody seemed to know exactly HOW this process works.

How do they establish the value of the vehicle? I have seen case law that took the wholesale value, but which one? Edmunds (lowest) Kelly Blue Book, or NADA? On KBB.com, for example, our car is worth about $7500 trade/wholesale and we owe about $11,500. I think its only about $6700 on Edmunds. NADA is higher than those 2 but can't remember what it was.

How is the 722 "approved"? Does it require an extra hearing (and possibly more atty fees?). What exactly do you mean by, "you have to come up with the funds 60 to 90 days after the 722 is approved"? By when does it have to be approved?

Can a relative gift you the money?

We have not reaffirmed - were going to, because the car loan is at 6.5% and we only owe 34 months more and this might be better than post BK financing, but if we could get a relative to help us out, redemption might be a possibility. Do you think it would be worth doing ?

We are less than 2 weeks from discharge date - are we too late to even talk about this?

Thanks!

[joab]

In my area, the court accepts the retail KBB value, with reasonable deviations if the car is in unusually good or poor condition. And they don't generally care where the money comes from--as a practical matter it's probably almost always from family members.

[santadawg]

what usually happens if you don't reaffirm you cars. will the credit union or the bank work out a deal with you. My wife is affraid if we don't reaffirm they will take her car and leave her with no car.

[BKParalegal]

First off, creditors don't want stuff they want cash, so they pop the car as a last resort. Second in regards to redeeming the car, it varies by jurisdiction, I usually get a Private Party sale of KBB.com then send the client to Carmax for a valuation. You then have to file a Motion to Redeem along with your supporting docs, and then creditor has 30 days or so to object, if they don't then the car is yours for the value you entered, and you put in your order that you will tender the payment within 60 days and at that time they have to release their lien. If they object,then it goes to hearing and the judge decides the amount. You can always refuse it if the judge goes to high and either reaffirm at that time or surrender it. In regards to the funds, you can beg, borrow or steal it, since this is after your 341 meeting, no one cares where the money came from.

Good Luck

[santadawg]

Thanks BK, I wish you lived near mass---I could use your help.

[auttienkassiemo]

I have both of my vehicles with my credit union and a $5000 dollar credit card too. If I choose to keep the vehicles and make the payments I have to keep the credit card due to the cross collateral clause. Had I known that I obviously wouldn't have opened that credit card..I simply emailed my credit union to ask them if all of their products have a cross collateral clause to them...they wrote back and said yes.