Reaffirm??

[Freddy03]

Sorry I'm going to be full of questions today....lol

I still haven't met with the attorney (appts scheduled next week) and I don't want to keep hounding them until I actually decide to use them.

When I briefly talked with the attorney he mentioned reaffirming the house and car?

I'm not sure what that means. I have just seen a few posts here stating that it's not a good idea. Why?

My situation is I have been late on my car in the past. I'm current now. I still have about 4 years left of payments. I need to keep this car. I'm upside down about 3k on it.

My house - I have been late but in Sept I'll be current b/c they pushed the 2 months I was behind to the back of the loan. I am upside down but want to stay in the house. Moving is not an option. We have been in the house for about 8 years. Refinance (which was the starting point of our financial ruins) back in 05/06.

Any suggestions?

[despritfreya]

Reaffirming means you sign a separate document that basically states "if I default in the future, you can repo the asset and sue me for the balance owed on the contract". A reaffirmation agreement protects the creditor, not you.

The Bk law requires you to reaffirm personal property loans, such as a vehicle loan. If you do not the lender (in most jurisdictions) will have the right to repo even if the account is current. The problem you face is, if you reaffirm and down the road cannot pay it, the lender will sue you. If you are not sure you will be able to make the payments (no one has a crystal ball), then walk away from the vehicle if the lender requires a reaffirmation agreement.

I am a firm believer that one should never reaffirm a loan secured by real estate. There is no requirement in the Code to reaffirm anything but personal property. Real estate loans are usually a lot of money and, if your State does not have an anti-deficiency statute you leave yourself open to a very large debt if you do not make the payments. (There is an argument that even in an anti-deficiency state the signing of a reaff takes the loan out of the state protection - while I have never seen this happen, the fact that there is such an argument makes me believe that even in such states one should not sign a reaffirmation agreement.)

[Sweetpea3829]

Freya...what are the benefits, if any, of reaffirming?

[ccsjoe]

I can only speak to reaffirming a car loan. In our specific case, we have a 2010 Ford with an outstanding 29K loan. As most people here know, Ford demands reaffirmations or they will repo ,even if you are current on payments. For us, it came down to we need the car, can't afford to spend 1 month without a car due to where we live/work-no public transportation, and can't save money fast enough to buy a used car in cash before ours would get repo'd since we are saving to pay uor attorney fees. Do we want to be stuck with this loan, no, not really. Will it hurt is? No, they will keep reporting to the credit bureaus once we get our discharge and will likely speed up our credit score recovery. Can we afford the payments? Yes, since we are discharging over 40K in unsecured.

Bottom line, a reaffirmation, in my opinion, is a personal choice based on each person's individual circumstances, although I tend to agree with no reaffirming unless needed.

[stormy]

I'm reaffirming my car; my loan is with GMAC. I bought a 2010 Dodge Charger in November of last year and I'm upside down on it. There's no other way for me to get to work as there is no public transportation available. This will be the only payment I'll be left with after my bankruptcy is done; everything else will be gone so I can easily afford the car.

My lawyer said that GMAC will want a reaffirmation if I want to keep the car; otherwise they could repo it and I just can't risk that.

[despritfreya]

In response to Sweetpea's statement of "Freya...what are the benefits, if any, of reaffirming?"

Personally I see no benefit. Folks will tell you that if you do not reaffirm the account will not be reported as being paid on the credit report. Since I personally do not put a lot of emphasis in credit reports my position is "so what".

Just remember that if you do not reaffirm and you are not in one of the jurisdictions that allows a "pass through", then the lender can repo even if payments are current. In my jurisdiction one is required to reaffirm if the lender insists.

[researchnerd]

For us, it came down to we need the car, can't afford to spend 1 month without a car due to where we live/work-no public transportation, and can't save money fast enough to buy a used car in cash before ours would get repo'd since we are saving to pay uor attorney fees. Do we want to be stuck with this loan, no, not really.

Just wanted to say that you may have more time to save than you think. Your car cannot be repo'd while the automatic stay is in place, which gives you at least a few months, and often, much longer. If you haven't already, talk to your attorney about how long the BK process is likely to take in your jurisdiction.

I live out in the middle of nowhere so I can't go without a car for even a week. I stopped making car payments when we filed (per my attorney) but I'm saving as much of that cash as I can, just in case I need to get current to make the lender happy with my Ch7. I'm OK with giving up the car if needed (I'm ~$10k underwater) but may need the payments to keep my disposable income negative. I figure that if I do give up my car, I can use the saved $$ towards a temporary beater, or as a down payment at a buy-here-pay-here.

despritfreya nailed it with this: A reaffirmation agreement protects the creditor, not you. The only reason to do it is because you are required to.