topic Re: Entering finance agreement after CH7 discharge.. in Bankruptcy

Entering finance agreement after CH7 discharge..

ballysdad — Wed, 02 Sep 2020 02:18:20 GMT

Can you enter into a finance agreement with the same company that you discharged secured debt with?

Example: CH7 Filed and discharged. Car was not reaffirmed. I know there is no fiscal responsibility and I could keep paying but can I refinance with the same company after the fact for the same asset?

Re: Entering finance agreement after CH7 discharge..

Anonymous — Fri, 18 Sep 2020 03:41:28 GMT

If you discharged the car loan, then the next thing they usually do is repossess the car.

How quickly that happens depends on how much they think they can sell the car for, how easily they can get at it, and if they can even find it.

When my ex filed bankruptcy, they were trying to repo his car, but the automatic stay protected him. He used the bankruptcy process to stall them by feigning interest in keeping it, and by the time the stay was lifted and they got the car back, he'd been driving it for 9 months without paying it.

He told me 2 months was him parking it at an abandoned bowling alley and then it just wasn't there one day.

Of course, the finance company can't do anything illegal to get at the car. If you keep it in the garage, or behind a locked fence, they can't bust it wide open to repossess the vehicle. But eventually, they'll get sick of your games an file what's called a replevin, which is basically a court case where they tell a judge "He's made it impossible for us to get at our property and we want a court order for him to hand it over.".

If you discharged the unsecured part of the finance agreement, it got rid of the debt but not the lien. They'll want the car back and they'll repo it eventually. Although nothing legally stops them from signing a new agreement with you, they'll probably laugh you out of the bank (or off the phone) if you try. Creditors tend to fume over people who burn them for a lot of money in bankruptcy, and cars are a big ticket item with horrendous depreciation, that sell for next to nothing at auction.

Case in point, you might owe 85% of a loan after 2 years, but the car might have as little as 30-50% of its retail value left, but finance companies don't get retail at auction because they're selling a mystery car that they had to repossess to dealers who sell them for retail.

The law also obligated them to minimize loss and to get rid of it fast. So they don't even try to get the best price.

The bank also goes after you (if you haven't filed bankruptcy) for the costs of the repo, so the car pretty much disappears. They charge you $2,000 for a repo and cleaning it up for auction and driving it there, it gets $1,800 at auction. Hell, you might owe them a couple hundred more than was left on the loan.

If you are going to re-affirm, it makes more sense to do it only if you have few payments left and to MAKE THOSE PAYMENTS, and if you will own the car free and clear and without your ex's name on the title. (My most recent ex was on the title of my car and so I was never going to own an unencumbered title even if I ever managed to pay it off, and it was deeply underwater, so I threw it in the bankruptcy.)

So when the bank takes it away from you after bankruptcy, it won't be to make money off it, or even minimize their loss. It'll be because if they didn't, then it would be open season because everyone who filed would get a free car.

Re: Entering finance agreement after CH7 discharge..

FireMedic1 — Fri, 18 Sep 2020 13:59:12 GMT

Since you didnt reaffirm. Its like you never filed BK. They just cant come after you for any monies if you default. More than likely they wont refinance the same car. Another lender may do so. But your interest will be higher due to the BK. So you just might be better off where your at now and just keep paying until its done.

Re: Entering finance agreement after CH7 discharge..

FireMedic1 — Fri, 18 Sep 2020 14:02:33 GMT

@Anonymous wrote:
If you discharged the car loan, then the next thing they usually do is repossess the car.

How quickly that happens depends on how much they think they can sell the car for, how easily they can get at it, and if they can even find it.

When my ex filed bankruptcy, they were trying to repo his car, but the automatic stay protected him. He used the bankruptcy process to stall them by feigning interest in keeping it, and by the time the stay was lifted and they got the car back, he'd been driving it for 9 months without paying it.

He told me 2 months was him parking it at an abandoned bowling alley and then it just wasn't there one day.

Of course, the finance company can't do anything illegal to get at the car. If you keep it in the garage, or behind a locked fence, they can't bust it wide open to repossess the vehicle. But eventually, they'll get sick of your games an file what's called a replevin, which is basically a court case where they tell a judge "He's made it impossible for us to get at our property and we want a court order for him to hand it over.".

If you discharged the unsecured part of the finance agreement, it got rid of the debt but not the lien. They'll want the car back and they'll repo it eventually. Although nothing legally stops them from signing a new agreement with you, they'll probably laugh you out of the bank (or off the phone) if you try. Creditors tend to fume over people who burn them for a lot of money in bankruptcy, and cars are a big ticket item with horrendous depreciation, that sell for next to nothing at auction.

Case in point, you might owe 85% of a loan after 2 years, but the car might have as little as 30-50% of its retail value left, but finance companies don't get retail at auction because they're selling a mystery car that they had to repossess to dealers who sell them for retail.

The law also obligated them to minimize loss and to get rid of it fast. So they don't even try to get the best price.

The bank also goes after you (if you haven't filed bankruptcy) for the costs of the repo, so the car pretty much disappears. They charge you $2,000 for a repo and cleaning it up for auction and driving it there, it gets $1,800 at auction. Hell, you might owe them a couple hundred more than was left on the loan.

If you are going to re-affirm, it makes more sense to do it only if you have few payments left and to MAKE THOSE PAYMENTS, and if you will own the car free and clear and without your ex's name on the title. (My most recent ex was on the title of my car and so I was never going to own an unencumbered title even if I ever managed to pay it off, and it was deeply underwater, so I threw it in the bankruptcy.)

So when the bank takes it away from you after bankruptcy, it won't be to make money off it, or even minimize their loss. It'll be because if they didn't, then it would be open season because everyone who filed would get a free car.

This may have happened in your case. But its not the norm. Some companies want you to reaffirm. Some dont care. They just want to get paid. So each lender has their own rules when it comes to BK. But saying "If you discharged the car loan, then the next thing they usually do is repossess the car." isnt true in all cases.

Re: Entering finance agreement after CH7 discharge..

ballysdad — Sat, 19 Sep 2020 00:13:01 GMT

Thank you,

The reason I asked is because I bought the car right before I filed. I wanted to re affirm but my lawyer advised against it and said the trustee would not sign off on it so I just keep making payments. I want to re finance and keep the car but have to find a company that is willing. I know they can come after it at any time. I will just keep paying and hope that buys me time to re finance. I just do not like paying every month not know if they are coming tomorrow to pick it up.

Re: Entering finance agreement after CH7 discharge..

Anonymous — Sat, 19 Sep 2020 00:28:19 GMT

@ballysdad

https://www.bankruptcytruth.com/learning-center/50-faq/reaffirmation-agreement-need-sign/

I looked into it further. If you continue to make payments after not signing a reaffirmation, they can't repossess the car.

If you fall behind and they repossess the car with no reaffirmation, they can't sue you for a deficiency balance or the repo.

It sounds like your lawyer advised you correctly to avoid a reaffirmation because this sounds like the best of both worlds to me. Apparently, some creditors absolutely insist on the reaffirmation because they want to be able to come after you for the deficiency later if you fall behind again.

Given that you probably won't get favorable terms on your refi and I'm assuming you like the car and want to keep it, making the payments and getting your title in the mail when they're done might be the best course of action.

When I was in BK7, I was so broke and my last ex had my car anyway that reaffirming or staying on the loan and paying were the last thing I wanted to do. I told my BK lawyer just make it go away.

Re: Entering finance agreement after CH7 discharge..

ballysdad — Sun, 20 Sep 2020 01:55:29 GMT

Yes when we filed on the petition we indicated I would like to "ride through". I was under the impression that the last round of BK rules eliminated that language to close the "best of both worlds" senerio against the banks. I know they are not in the car selling business so if someone wants to pay they usually let them. I thought that the new rules allowed the bank to reposses the car if there was no reaffirmation signed and it was their choice. The old "ride through" prevented them until a default in payments. Thank you for the look up.