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Toyota motor credit and choosing not to reaffirm.

DeepKc
Frequent Contributor

Toyota motor credit and choosing not to reaffirm.

My husband filed for bankruptcy  last month. His 341 meeting is on may 24th. Most of his debts are from even before i met him. From 2012 and he has no new credit cards or debts other than the two autoloans.

 

Here is a little background on our car loans. We jointly signed an auto loan in feb 2017 and he traded in his 2015 prius for a 2017 coroalla in feb 2017 as well. Basically he has 45000 $debt in these two car loans. And we both drivers/couriers and we both need our cars for our income. My fully paid car got totaled so we had to purchase a reliable car for my job.So we intend to keep paying for these cars surely.Now our attorney just suggested that my husband reaffirm both loans. So when my husband filed the petition he selected 'reaffirming the car loans option'. I did a lot of research on this site and internet regarding reaffirmation and found out quite a lot of information that made us decide that he should not reaffirm but we keep the car loans current by making payments. Here is what i found out.

 

1. As joint account holder since i am not filing for bankruptcy , the bankruptcy information such as account included in bankruptcy should not appear in my report. This used to happen a lot before but now rhey use a different reporting system

There is site that explains this very clearly . We confirmed this with toyota as well. They told me to call them after discharge sp that they can report to my credit profile the loan as current since i keep paying on it and i have not filed for bankruptcy. Btw here is the link that explains about the metro.2.0 , which reports bankruptcy only on the person's credit who filed for bankruptcy and not the joint account holder.http://robertweed.com/2013/12/27/bankruptcy-co-signers-credit-report/.

I pulled both my husband's and my reports and in his report this account shows as closed and in mine it shows as open ,current ,paid as agreed. My husband will have his 341 on may 24th as i mentioned before so right now we are between filing and discharge.

 

2. My husband car has a huge negative equity. He traded in 2015 prius for a new corolla which was worth 18000 so basically he has total loan of 30000. From prius 12000 .I learnt that if your car has a negative equity then the lender would not repossess if you keep making payments nd not reaffirm.

 

3.reaffirmation pros are positive credit reporting and ruling out any possibility of repossession and online access to bill pay but these are not that important to my husband and me . My report wont be affected by our joint loan and he is ready to rebuild from scratch. 

We pay from our bank and we can keep track of loan balance.

 

5. Cons of reaffirmation , due to unforeseen events if we miss one payment then they not only will reposses the car but sue you for money. And there is no guarantee that they will continue to report to bureaus after reaffirmation. We put a lot of miles on our car 200 miles a day so obviously car value will depreciate very quickly but his reaffirmed loan will not . 

 

6. This was very important part in our decision making. We spoke directly with toyota motor credit. And they confirmed that reaffirmation is our choice . If we decide keep current on the payments then they will not repossess his car.

 

 

So we need to update this with the attorney . Although i was surprised why our attorney didnt educate us about this . I read most attorneys suggest against reaffirmation.

Those who have gone through this whole process please share your experience regarding reaffirmation . What do you guys suggest in our case ? Thanks! Sorry for any typos, typing from my phone. Also is it possible for me to refinance our joint car loan only in my name after the discharge? I will only do so if i get better interest rate than what is now

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Message 1 of 7
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njcobra10tha
Established Contributor

Re: Toyota motor credit and choosing not to reaffirm.

Something does not sound right.

 

5. Cons of reaffirmation , due to unforeseen events if we miss one payment then they not only will reposses the car but sue you for money. And there is no guarantee that they will continue to report to bureaus after reaffirmation. We put a lot of miles on our car 200 miles a day so obviously car value will depreciate very quickly but his reaffirmed loan will not . 

 

This could vary by state but this is not accurate for NJ:

 

 

If you do not reaffirm they cannot reposess iunless you miss a payment but (and i think it has to be more than 30 days maybe more than 60 or 90)  they cannot go after you for any money as after all it was included in bankruptcy.  They will most likely not report it to the agencies after bankruptcy as was my case so no positive tradeline.

 

If my information is accurate in your state then it may not make sense to reaffirm as post discharge you will be in a better state and wouldn't it be nice to walk away from that upside down loan with no consequences and get a new car with better financing?  Many have done that the very same month as their discharge.

 

 

Message 2 of 7
SteelerNYC
Valued Contributor

Re: Toyota motor credit and choosing not to reaffirm.


@njcobra10tha wrote:

Something does not sound right.

 

5. Cons of reaffirmation , due to unforeseen events if we miss one payment then they not only will reposses the car but sue you for money. And there is no guarantee that they will continue to report to bureaus after reaffirmation. We put a lot of miles on our car 200 miles a day so obviously car value will depreciate very quickly but his reaffirmed loan will not . 

 

This could vary by state but this is not accurate for NJ:

 

 

If you do not reaffirm they cannot reposess iunless you miss a payment but (and i think it has to be more than 30 days maybe more than 60 or 90)  they cannot go after you for any money as after all it was included in bankruptcy.  They will most likely not report it to the agencies after bankruptcy as was my case so no positive tradeline.

 

If my information is accurate in your state then it may not make sense to reaffirm as post discharge you will be in a better state and wouldn't it be nice to walk away from that upside down loan with no consequences and get a new car with better financing?  Many have done that the very same month as their discharge.

 

 


The car was cosigned bythe OP who isn't filing BK.

 

Which brings me to my question . .  .Deepkc, what are the reasons you're not filing BK along with your husband? I'm not automatically saying you should, but it could very well make sense i fyou have significant debt given you're $12k upside down on this car already.

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Message 3 of 7
DeepKc
Frequent Contributor

Re: Toyota motor credit and choosing not to reaffirm.

I am not upside down on my car loan which is our joint loan. My husband is on his car loan which is his loan alone ( we have two car loans). His car has negative equity. Mine is fine infact i got a good deal . I just have this one joint loan with him for which i am not filing bankruptcy because right now we can make payments perfectly for both car loans no problem . I dont have much cc debt and i just started building my credit two years ago. I never had any unpaid debts etc. My report is clean. So i dont need to file bankruptcy. My husband debts are mostly from 2012 ( from his previous marriage) . He is filing for bankruptcy because he was sued by his cc creditors.

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Message 4 of 7
SteelerNYC
Valued Contributor

Re: Toyota motor credit and choosing not to reaffirm.


@DeepKc wrote:

I am not upside down on my car loan which is our joint loan. My husband is on his car loan which is his loan alone ( we have two car loans). His car has negative equity. Mine is fine infact i got a good deal . I just have this one joint loan with him for which i am not filing bankruptcy because right now we can make payments perfectly for both car loans no problem . I dont have much cc debt and i just started building my credit two years ago. I never had any unpaid debts etc. My report is clean. So i dont need to file bankruptcy. My husband debts are mostly from 2012 ( from his previous marriage) . He is filing for bankruptcy because he was sued by his cc creditors.


ahhhhh . . sorry about that. I was reading it as his $12k under water loan was the one you had signed on. This is his chance for a fresh start . . let them have the $12k negative equity car back and get out from under that thing! It would be ridiculous to keep it.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU More Rewards Amex/NFCU Platinum/PenFed Power Cash Rewards/PenFed Pathfinder Visa/Citi Costco Visa/CapitalOne SavorOne/Apple Card - $139,100 total revolving, 21% utilization
3.25% mortgage July 2020, $20k used Auto Loan October 2020, $20k PenFed Personal Loan Dec 2020
687/683/673 EX/EQ/TU w/ 5/6/6 INQs as of Jan 2021
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Message 5 of 7
DeepKc
Frequent Contributor

Re: Toyota motor credit and choosing not to reaffirm.

I agree. He has already started receiving pre discharge auto loan offers. Have to research and see which lender can approve him for low interest 

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Message 6 of 7
jw2016
New Contributor

Re: Toyota motor credit and choosing not to reaffirm.

I personally wouldn't reaffirm a car with a significant amount of negative equity.  As you said if you reaffirm and something happens he could be sued for the balance. The only reason we did reaffirm one of our cars during our bankruptcy was because  we didn't have any negative equity and we only owed around $4000.  

 

If he has a good payment history with his auto loans, he shouldn't have a problem getting a new auto loan after bankruptcy.  We bought a new car a few months after our bankruptcy at a decent rate (6%).  I know you just bought the car, but it might be possible after the bankruptcy to walk away from that car and buy a new one with a much lower payment and no negative equity.  As you know your results might vary but I would definitely discuss this further with your lawyer.

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