Ride Throughs don't exist, or do they?

[Mark80]

After months of reading about ride throughs, and how they were abolished in most states since the bankruptcy law changes I am still confused. Since I still find dozens of posts stating that "if" you are on time with your payments the creditors by law cannot take your property without reason. However if this is true, doesn't that make it a ride through?

I would love to not reaffirm anything, another tip many have given out. However if ride throughs don't exist that means making your payments on time give no security on keeping your property.

Can someone clear this up for me? I was under the impression as long as I pay my autos on time they cannot take them.

Thank you

[Dirk Squarejaw]

I know that in the southern district of Indiana, I was told at my 341 meeting that I had three choices: reaffirm, redeem, or surrender. The trustee told me that mortgages were fine, but they no longer allowed people to ride-thru on cars.

However, I think with the current economic climate, they may not come and get it as long as they're getting their money. Many people on here have reported successful ride-thrus recently and even a few with bankruptcy-unfriendly lenders like Ford Motor Credit. There is a story that someone has linked on here a few times that states that Ford and Chrysler were gung-ho to repo cars that were current just to make a point when the laws changed.

[Mark80]

I noticed the same thing, so far on the few reaffirmation agreements I have gotten I have been asked on those three options. I don't really have an issue reaffirming, but the last car I bought that I owe a ton on still has been acting up. I was thinking if the tranny goes out I could walk away at that point. But I don't want to wake up one morning and it be gone.

Thanks for the response!

[AngelinaCatHub]

If you attempt a ride through whether it is legally sanctioned, I doubt the car mortgage holder will take your car. In this economy they would be nutz to do so. There is a glut of cars out there as houses are vacant everywhere. I would talk with the car mortgage company. If you are allowed by your Trustee to keep the car, and the mortgage company allows you to pay them, I cannot see a problem except maybe the Trustee would consider this a preferential payment. I would take the chance as you need wheels and used cars are not too expensive where I live. 'Hub

[mrbsf]

Under current bankruptcy law you have only three choices for secured debt (excluding home mortgages): reaffirm, redeem or surrender. If you want to keep your property, then indicate your intention to reaffirm on the petition. Then don't sign the reaffirmation agreement, if the lender even presents one.

If you are current on your payments, the lender can not repo the collateral property. This is based on consumer laws outside of federal bankruptcy laws. The do have a right not to report your payments to the credit bureaus after discharge, because your liability on the debt is essentially wiped out. Hope this helps.

[ansky0007]

If you are current on your payments, the lender can not repo the collateral property. This is based on consumer laws outside of federal bankruptcy laws. The do have a right not to report your payments to the credit bureaus after discharge, because your liability on the debt is essentially wiped out. Hope this helps.

Where is this in writing?

[mrbsf]

Where is this in writing?

This was conveyed to me by my attorney. However, if you do not reaffirm and you are even one day late after discharge, then CAN repo. That doesn't mean they will. As was stated before, it makes very little sense for the creditor to repo b/c after discharge they can't collect any deficiency.

I want to be clear, that this is state law and varies by individual state. Best thing to do, as usual, is to consult your attorney on applicable state law.

[ansky0007]

This was conveyed to me by my attorney. However, if you do not reaffirm and you are even one day late after discharge, then CAN repo. That doesn't mean they will. As was stated before, it makes very little sense for the creditor to repo b/c after discharge they can't collect any deficiency.

I want to be clear, that this is state law and varies by individual state. Best thing to do, as usual, is to consult your attorney on applicable state law.

My concern is my vehicle has $4000k equity based on auction value... They would want mine since they can make money by auctioning it. Lawyer is telling me not to sign the reaffirmation paperwork but if I dont I cant risk them deciding to come and take it.

[justbroke]

If you are current on your payments, the lender can not repo the collateral property. This is based on consumer laws outside of federal bankruptcy laws. The do have a right not to report your payments to the credit bureaus after discharge, because your liability on the debt is essentially wiped out. Hope this helps.

This is not true.

The basis on which a lender can repossess the collateral, is based on a default. Almost every contract will read that Bankruptcy is a breach of contract and immediately constitutes a default.

Motor vehicle repossession is usually a separate section of State Statutes and is in favor of the lender!

On top of the default, when you file and get your discharge, you no longer owe the lender any money. They now just have a lien on a vehicle, and you don't have to pay them a cent. That's why you need to reaffirm (sign an agreement basically assuming the debt), redeem (pay them present value for it), or surrender (give it back). You do those things to keep them happy. (I'll agree that continuing to pay them on-time keeps them happy too... but literally your mileage may vary. Pun intended.)

While it is highly unlikely that they'll take a car from a paying customer (who is on time)... they can and have all the existing (non-bankruptcy) law to stand on.

I think what you lawyer was conveying was what I just wrote. What he was hopefully trying to convey, is that it is highly unlikely that they'll repossess if you pay on time and are current.

That means it's possible, not probable. However, when possibility is in the mix... so is Murphy.

[mrbsf]

I think what you lawyer was conveying was what I just wrote.

Maybe. Although I was under the impression that in certain states if the lender accepts your "voluntary" payments post BK, then an implied contract does exist and under state law they can not repo unless delinquent. I may be wrong. I'll have to investigate further and post back.

[justbroke]

Maybe. Although I was under the impression that in certain states if the lender accepts your "voluntary" payments post BK, then an implied contract does exist and under state law they can not repo unless delinquent. I may be wrong. I'll have to investigate further and post back.

That would be interesting to note. However, the 2005 amendments to the Bankruptcy code made it very clear; reaffirm, redeem, or return (surrender).

Again, I do note that it's underlying state non-bankruptcy laws that govern many things in Bankruptcy.

The problem with allowing ride-throughs is that they become non-recourse loans. This puts the lender in a very very bad position. The reason why? Because you could just decide a year later you don't want it, and surrender it. The lender will be stuck with the collateral with no ability to get any money from you. The collateral would have been devalued even further, and the payments you made, may not have been adequate protection for the loss in value of the collateral.

That's just my opinion on the whole thing. Ride-throughs, traditionally, were great because it required no paperwork. However, the lenders seem to have gotten smarter, and they are the ones who pushed all that junk in the 2005 BAPCPA amendments.

[danaf]

This thread is getting too complex for something simple.

Yes - they say ride-throughs are not allowed BUT in practice they are still very much alive. It's unspoken.

People have to consider the economy and how much it costs to repossess cars. And how many dealerships are closing down. And how many banks have repossessed cars they can't even sell. And how many houses the banks have....the list goes on. The folks that have your loans don't want your cars or your homes....they want their money, their interest - that's it. It's very simple.

On my bk petition I checked that I intended to reaffirm my car even though I didn't and I didn't. Trustee didn't blink an eye over it, never asked. Her job wasn't reaffirmations - that's a judges job should the paperwork ever even be sent in. I pay ontime every month and nobody will come knocking at my door. Even it it had equity, they wouldn't come knocking. (just make sure you can exempt equity for bk purposes).

Obviously I cannot say for certainty that it's a no-brainer but in this economy - it's 99.9% certain. The only time I would worry is if the owner of the note wasn't a major bank or CU, but rather a person or some shoddy operation.

[laurannm]

This is not true.

The basis on which a lender can repossess the collateral, is based on a default. Almost every contract will read that Bankruptcy is a breach of contract and immediately constitutes a default.

Motor vehicle repossession is usually a separate section of State Statutes and is in favor of the lender!

On top of the default, when you file and get your discharge, you no longer owe the lender any money. They now just have a lien on a vehicle, and you don't have to pay them a cent. That's why you need to reaffirm (sign an agreement basically assuming the debt), redeem (pay them present value for it), or surrender (give it back). You do those things to keep them happy. (I'll agree that continuing to pay them on-time keeps them happy too... but literally your mileage may vary. Pun intended.)

While it is highly unlikely that they'll take a car from a paying customer (who is on time)... they can and have all the existing (non-bankruptcy) law to stand on.

I think what you lawyer was conveying was what I just wrote. What he was hopefully trying to convey, is that it is highly unlikely that they'll repossess if you pay on time and are current.

That means it's possible, not probable. However, when possibility is in the mix... so is Murphy.

While it is true that some contracts state that BK is a default, almost all courts have ruled that this type of BK default clause is unenforceable.

I've read some articles that discuss how the BK code specifically talks about personal property (i.e. cars) and not real property, when it comes to reaffirm/redeem/surrender.

Here is the bottom line: In almost every state (but not all), if you are current with payments on the car, they cannot repo due to state laws.

On our petition instead of checking the box for reaffirm, our lawyer simply typed in "debtor will retain collateral and keep making payments". This seems to be common practice, at least in our area.

[PoorGrammyinBK7]

While it is true that some contracts state that BK is a default, almost all courts have ruled that this type of BK default clause is unenforceable.

I've read some articles that discuss how the BK code specifically talks about personal property (i.e. cars) and not real property, when it comes to reaffirm/redeem/surrender.

Here is the bottom line: In almost every state (but not all), if you are current with payments on the car, they cannot repo due to state laws.

On our petition instead of checking the box for reaffirm, our lawyer simply typed in "debtor will retain collateral and keep making payments". This seems to be common practice, at least in our area.

That is what my lawyer did too. So far we are paying as usual and have not heard anything. But we are not closed yet so I wonder --- because I think someone said the stay is not lifted until you are closed.

[laurannm]

Your right, the stay is not officially lifted until after closing. We closed about 6 weeks ago and haven't heard a peep. Citimortgage keeps sending the information-only statements, and our second mortgage is not only sending regular statements but also continuing to report to the 3 bureaus. We didn't reaffirm anything.

I had actually called Citimortgage and our 2nd lender (First Horizon) early in the process and both stated that reaffirm wasn't necessary and it would be business as usual.