Why You Have To Reaffirm Car Loans

Your car is one of your most important possessions. You want to keep it when you file a bankruptcy case. Most people have some sort of a car loan. Automobile finance companies such as TD Financial and Ford Motor Credit, are very interested in your bankruptcy case. Most times in bankruptcy, they want to repossess your car right away. Maybe you’ve been behind in your payments. Maybe you don’t have insurance. But if you want to keep your car, you have to reaffirm. And you have to reaffirm right away.

Statement of Intention

You have to state your intention as to whether you want to surrender your car, reaffirm the debt or redeem the vehicle. Simply “riding through” – doing nothing, getting discharged and continuing to pay the car after bankruptcy generally is not available as an option. You have to act on your statement of intention promptly – within 45 days.

The reaffirmation agreement

To sign a reaffirmation agreement, you are contracting to pay the car loan after bankruptcy just as you owed it before. You won’t get a discharge from this debt. If you don’t pay the debt in the future, you’re still liable personally for it. You have to be up to date with payments to reaffirm. Otherwise, you’ll lose the car and still be liable on the debt. You need to be able to afford the loan. Maybe you can, maybe you can’t. Your lawyer must also attest to your ability to pay.

When to file a reaffirmation agreement

A reaffirmation agreement must be signed before discharge. So don’t delay. And if you don’t sign a reaffirmation agreement, the car lender may seek an order from the bankruptcy court saying the automatic stay is terminated and then repossess your car.

You may surrender the car and you will not be responsible for any deficiency after you receive your discharge.