Dear Bankruptcy Adviser,
I filed bankruptcy last year. In the process, I had a car loan reaffirmed. The car is no longer on my credit report. Why? I even went to a dealership for a new car loan, was approved and no mention was made of my other car loan. What happened to the car loan after bankruptcy?
-- Nicole
Dear Nicole,
Dealing with car loans after filing for bankruptcy can be a frustrating and maddening endeavor. If the car loan was truly reaffirmed through the bankruptcy, then you are still liable for the remaining balance -- whether the balance shows up on your credit report.
A reaffirmation agreement is a legally enforceable contract filed with the bankruptcy court, which states your promise to repay all or a portion of a debt that may otherwise have been subject to discharge, meaning eliminated, in your bankruptcy case.
At this point, you should tread very carefully with the purchase of another vehicle. You must be 100 percent certain whether you reaffirmed the other vehicle balance or else you could have the vehicle repossessed, sold and have to pay the difference between the sale price and balance owed. It would definitely show up on your credit report and ruin any post-bankruptcy credit restoration that you may have accomplished.
I am surprised that the loan is no longer showing up on your credit report after you executed the reaffirmation agreement. Typically, lenders say that's the reason that a reaffirmation agreement should be completed. The car owner will get the benefit of receiving monthly statements and reporting future payments to the credit bureaus. This is one way to start re-establishing post-filing credit.
I would hope that you could contact someone within this particular finance company and rectify this problem. I have no doubt it will be outrageously frustrating to resolve the issue. Just remember this saying: Patience is a virtue, but persistence to the point of success is a blessing.
You cannot assume that the debt no longer exists. While the lender is not reporting the loan payments to the credit bureaus, you do state that you executed a reaffirmation agreement while inside the bankruptcy. This means you appear to be legally responsible for the balance owed on that vehicle.
While you state that you have been approved for a new car loan, it is hoped you did not sign for it yet. You could create a huge mess if you do not first confirm whether you are liable for paying on your current vehicle. Otherwise, all post-bankruptcy efforts will be lost, and you will find yourself needing another bankruptcy attorney sooner than you think.
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