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 Dear
Bankruptcy Adviser:
I was supposed to have my car loan reaffirmed
in Chapter 7, but nobody ever sent out the paperwork. The
car loan was discharged in the bankruptcy. Now
the situation I'm in is that while I was deployed
out of the country, my insurance lapsed and the
car was stolen and a lot of stuff was taken off
of it. I have the car, but it's a shell. I asked
the loan company to take the car now, and they
said they will pick it up. Am I liable now, because
if they sell the car it will not be worth much,
because all the stuff was stolen off of it?
-- Tim
 Dear
Tim,
Thanks so much for your question. I have good news and bad news. The bad news is that you're not alone. Situations like yours are unfortunately all too common.
First, let me say this: I'm not making a political statement about the Iraq war or the state of our military in this column. However, I think people reading this column would be absolutely shocked to learn of the financial predicaments that many Iraq veterans have faced since returning home. I am only one person, but I have heard numerous unbelievable stories.
Recently, I filed a bankruptcy for a Marine who was unable to pay his bills. This guy had a wife and three kids and for some reason the base to which he was assigned said he did not qualify for on-base housing. He had been delivering pizzas to supplement his income, pay his rent and support his family. But when he went to Iraq, even with military hazard pay, his income dropped more than $1,200 per month. Thus, as a "thank you" to this soldier, while he was deployed his family was plunged into debt and bankruptcy became the only option.
I consulted with two Army cadets
who came home to learn that the Army credit union
had repossessed their vehicles because the automatic
payment that they had set up did not actually
get set up. They were being sued for debts on
the cars because the payments had not been made.
It might be easy to blame them because they did
not make sure the automatic deduction was set
up. However, they showed me the document proving
that the fax went through two days before they
were deployed. Their lives were turned upside
down and their credit was destroyed by a bureaucracy
that couldn't be bothered to care.
Finally, the good news. Tim, you are one of the few people who is benefiting from bureaucratic inaccuracy and inefficiency. You will not be liable for the remaining balance after the car is sold because, as you said, the reaffirmation paperwork simply didn't go out. Thus, you did not agree to be liable for the debt after the bankruptcy and the car lender is not able to sue you for the remaining balance. You can turn the car in and walk away, no questions asked.
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