Re-affirmation of car and mortgage during a ch 7? Need help!

[Anonymous]

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!

[Anonymous]

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@Anonymous wrote:
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!

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How much do you owe on the car and what is it worth?

[Anonymous]

I believe I owe approximately $7300 on it. This is about what kbb has for private sell value at its max

[Anonymous]

You can not sale the car and keep the cash. You would have to provide a title with a lien release, which you only obtain once the loan is satisfied.

Even though the loan would be discharged it is a secured debt. Meaning if you don't pay it they take the security(car). They still fully have that right.

If you don't reaffirm many lenders allow you to do a pass through. So if you pay the note they let you keep the car, but the minute you don't pay they can repo it.

[Anonymous]

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!

[Anonymous]

I am hoping to keep it as long as I can without re-affirming. I’m afraid to call the lender to see if they will re-possess. I don’t want to bring attention to it! Do most lenders allow to pay and not repossess? Seems like it would be better for them too- as I’m sure the re-possessing process is a hassle and they’d lose money.

As far as the mortgage goes, what is your opinion? My lawyer said by reaffirming one I had the best of both worlds- reporting on one but if something bad happened and I couldn’t sell the house for what I owe I wouldn’t be held accountable for the 2nd.

This is all so stressful and I just want to make the best decision.

Thanks.

[Anonymous]

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.