Hello! I just filed for a ch 7 bankrupcy and am now trying to decide if I should re-affirm my car loan and mortgages. I’m leaning toward not reaffirming my car loan because it’s having some mechanical problems and old. However, I am told that if I don’t reaffirm the lender can repossess the car even if I’m making payments in time! So the thought of just being left with nothing freaks me out. My lender is Centris credit union- does anyone know if they are known to repossess?
For my mortgage, I have an 80/20 loan thru veridian. Initially, I was gonna reaffirm both loans just for the payment reporting. I know I can afford the payments but again, the idea of something happening in the future and not being able to pay makes me very scared. Has anyone here had an 80/20? My lawyer said I could reaffirm one so that I get the benefit if the payment reporting, but if something were to happen I wouldn’t be on the hook for both of them. How does that work when if I went to sell the house? Would I have to pay off the entire balance including the second loan even if I didn’t re-affirm? Or could I just pay the balance off of the first mortgage, and keep the profit by not paying off the 2nd? I don’t understand how this works.
Also, if I don’t reaffirm my car can I sell it and just keep the cash and not pay back the bank?
Hopefully someone can clarify this for me. Thanks!
How much do you owe on the car and what is it worth?
If you were underwater, I'd say to absolutely get rid of it. However, it's something to consider since you're not.
Unless you can buy a cash car (and yes, this can be done for a couple grand) you may want to consider keeping it, preferably without reaffirming. The lending institution should be able to tell you whether or not they'll repossess if you keep making payments.
If it needs some minor repairs, you would very likely spend way less on those than you would a new loan with a post BK interest rate + the depreciation on that new car + being in debt way more than $7300. The best thing you can do for your recovery is to not take on new debt. So many folks do that right away after a BK and it makes me cringe. This is your fresh start!
Personally, I wouldn't reaffirm anything unless absolutely necessary. Pulling the BK trigger is a big deal and being able to walk away from any of these obligations (should you need to) is a safety net since you can't pull this trigger again for years to come.
You can get a small secured self lender loan after you're discharged. It will satisfy the installment loan mix of credit for your FICO score during your rebuild and essentially do what a reporting mortgage or auto loan would do.
More lenders than not will let you keep the car if you continue paying . . except for many credit unions that will automatically repo with a BK. IMO, the lender is going to be informed you filed soon enough, so I don't think the question would be taboo to ask. Perhaps let some others chime in and see.