loan reaffirmation after bankruptcy
I filed Chapter 7 bankruptcy; I asked to reaffirm my car loan. My
attorney and trustee both knew this. I never received my reaffirmation.
I called the law office that was handling this (and to which I made
my payment) they said they never received the affirmation agreement
from the car company. I left numerous phone messages with the law
office and my attorney. None was returned. I haven't made a payment
in three months since I was not getting any response. My bankruptcy
was discharged a few weeks ago. My attorney finally called me back
saying she received the reaffirmation after the discharge and she
says it's no good now. She has now contacted the car company's law
office and they are not returning her calls either. She thinks they
will take my car. What should I do?
OK, Linda, let's take a step back from the situation for a moment.
Your relationship with your attorney was clearly not the best, but
it is over. The bankruptcy is discharged. So let's focus on what
can be done in the present and the future.
When you first filed bankruptcy your car was protected
by the bankruptcy process. As of now, the debt on the car has been
discharged in your bankruptcy. But for you to keep the car, you
had to agree to continue making payments or else months earlier
the car company would have asked your attorney if they could pick
up the car. When you filed your bankruptcy the car dealer was notified
if you intended to keep the car and continue making payments or
whether you intended to surrender the vehicle. Even though you have
not returned the reaffirmation agreement the car dealer probably
still thinks you want to keep the car.
It is likely that your car is at
risk because once you receive the discharge notification you are
not protected by the bankruptcy courts any longer. However, the
car company would probably prefer that you continue making payments
(they would likely lose money if they had to repossess the car and
resell it). Therefore, if you can repair your relationship with
the car company, you will be able to keep the car. How is this done?
The quick answer is to contact the car company, pay
the prior three months' payments and then continue making payments.
It would be even better to contact them and ask for a new, separate
agreement because you cannot reaffirm the car after receiving the
discharge notification. Assure them that you intend to make the
payments because you want to keep the car. Even though the new laws
do not require reaffirmation, you ought to try to re-establish a
binding agreement with the dealer.
Reaffirming a car debt offers more protection than
to simply pay what you owe. Not much, but car companies prefer it
because they can sue you if you fail to make the payments. If you
do or do not reaffirm, the car company still has great latitude
about when they can repossess the car -- for example, if you miss
a payment, they can come get it immediately. If you've reaffirmed,
missing a payment does not send the repo man that day, although
I have heard of car dealers repossessing a reaffirmed car one week
after a missed payment!
Now, the big question is, have
you saved the three months of car payments that you didn't send
in? I hope you have, but it would be really normal, although irresponsible,
if you've spent some or all of it. While that would be normal behavior,
it's the kind that bites you back. Let's suppose you haven't saved
everything -- it may be possible to get the car company to raise
your minimum payment and fold the three months you owe into future
payments. This, however, is unlikely because the reaffirmation agreement
was never sent in. You might have an easier time buying another
car and allowing the repo of your current one.
It's up to you to investigate these
options, and in general, as I think you're finding, much of your
life is up to you. Linda, I know it's frustrating to have to deal
with this situation, and you certainly did not receive good legal
service. However, this is your life -- if you call your law office
a few times and they don't call you back, call every day. Call every
hour. Physically show up. It's not impolite or unreasonable to assert
Justin Harelik is a practicing attorney in Los
Angeles. To ask a question of the Bankruptcy Adviser go to the "Ask
the Experts" page, and select "bankruptcy" as