Reaffirmation Agreement and Repo question.

[MrHockeyGuy]

Hi All,

I am currently about halfway through the 60-day period for my re-affirmation agreement (forget what its called, but the period where I can decide whether or not to rescind the agreement).

Anyway, after the agreement expires on March 5th, I will be about $100 short of becoming "current" on my payments. I cannot talk to the financial people at Mazda until the account returns "to normal".

Will my car be immediately be repossessed? Will I be able to make an arrangement?

I get a different answer each time from the bankruptcy department at Mazda. One will say yes you can make an arrangement, and another will say "we cannot answer that question".

Anyone with any input?

[bcohen]

Are you saying that you reaffirmed, knowing full well that you were in behind on the payments, or did you reaffirm and then fall behind on the payments?

If you were already behind at the time of filing, then I am surprised that you did not make any reaffirmation conditional on the lender agreeing to forgive any arrearages and allow you to make up missed payments at the end of the loan.

If you were current at the time of filing, but subsequently fell behind, then it may very well be that you simply can't afford the car, and therefore you should rescind the reaffirmation ASAP. What you don't want is for the reaffirmation to become final, the car to be repo'd, and you find yourself owing a huge deficiency balance, and facing lawsuits and garnishment for it.

[HHM]

Rescind the Reaffirmation Agreement.

[MrHockeyGuy]

No, I fell behind AFTER the agreement. And my lawyer (an absolute buffoon) did not inform me that I could have certain conditions in the agreement.

I cannot rescind the agreement- I do not have family that can help me co-sign on a new vehicle, and I obviously don't have savings for a cheap car, nor is there public transportation where I live.

If I knew I could get financing for a cheaper used vehicle on my own, I would definitely rescind the agreement.

[HHM]

You can get financed, car dealers need to sell cars, you CAN get financed.

[MrHockeyGuy]

I know, but I don't have a job right now- I am taking care of a parent (whole reason this happened in the first place...ehhh).

If I have to shut my cell phone off or bar tend for the next month to keep the car I will do that...but mainly, I was looking to see if anyone had any thoughts on what Mazda would do if I have a small amount outstanding after the 60-day period ends.

I talked to another person today and they said they always work with people who are a bit behind after the period ends...so we'll see.

[HHM]

Okay, this begs the questions, if you have no job now, how are you going to pay for this reaffirmed car, or any other car.

As for what Mazda finance will specifically do, no one can say. The problem is, if they don't work with you and repo, you have defeated the purpose of the BK because you are on the hook for any balance. Your BEST option is to rescind the Reaffirmation and try to work with them. At least that way, if they don't work with you, you don't have to worry about a post BK debt.

[bcohen]

No, I fell behind AFTER the agreement.

Then the unfortunate reality is that you truly CANNOT afford this car, and that the monthly payment is too high for your budget.

And my lawyer (an absolute buffoon) did not inform me that I could have certain conditions in the agreement.

You could have attempted to re-negotiate the contract terms--as a condition of signing a reaffirmation agreement--although most lenders are unwilling to negotiate, except that some will agree to forgive late fees up until the date when payments resume, and stick any missed payments at the end of the loan, so that you are current at the time of reaffirmation.

I cannot rescind the agreement- I do not have family that can help me co-sign on a new vehicle, and I obviously don't have savings for a cheap car, nor is there public transportation where I live.

You can't not rescind the agreement! Otherwise, the moment that the deadline passes, Mazda Financial will repo the car, and you will be liable for the deficiency balance when it sells at auction! On the other hand, if you file to rescind the reaffirmation agreement now, you may be able to drive the car payment-free for a month or two, and when the lender finally does repossess it, you won't owe a thing.

If I knew I could get financing for a cheaper used vehicle on my own, I would definitely rescind the agreement.

You can get financed again. However, it would be better to save up some money and buy a "beater car" for cash than have to deal with one of those sleazy used car lots and their greedy subprime lenders.

[MrHockeyGuy]

Thanks for the replies guys.

I have over a month to make the decision. I owe 7,800 on the car and it blue books for 11,000- so that might be a route to take, just not sure how much people are really going to pay in this Michigan economy.

As far as why I am keeping it- because I am returning to work next month. I am just looking at worst, worst, worst case-scenarios.