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I have been making my car payments, if I file for bankrupcy could I keep my car?

Fresno, CA |

I have read something about a reaffirmation.... what is that?

Attorney Answers 3

Posted

Probably yes. Most individuals who file BK continue to keep their cars. A reaffirmation agreement is simply an agreement with the creditor that says, despite your BK, you agree to remain liable on the obligation.

When you file for BK you have 3 options with respect to your vehicle. You can redeem it, reaffirm the obligation, or surrender it. The best way for you to handle your auto debt depends on a number of factors.

If you are considering BK to resolve current financial difficulties, you should seek the advice and counsel of a BK attorney in your area so you can decide on a plan that will work for you going forward.

Good luck.

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Posted

I agree with Mr. Daymude buy I would add a possible fourth option. Depending upon who your lender is it may be possible to just retain the car and pay the loan without actually signing a reaffirmation agreement.

You should consult with and retain an experienced bankruptcy attorney to assist you with your filing.

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3 comments

William James Waters

William James Waters

Posted

This is no longer an option since the 9th Circuit Court of Appeals ruling in the Dumont case which prohibits this type of "Ride Thru" and requires a reaffirmation agreement be filed even if the payments are current.

Deborah F Bowinski

Deborah F Bowinski

Posted

Thanks. In my practice and experience there are still a number of lenders that will allow the retain and pay approach. If they insist on a reaff, however, then the debtor's options are more limited. My clients will often choose retain and pay knowing that it could backfire at any time. We discuss the risks and they make their choice.

Deborah F Bowinski

Deborah F Bowinski

Posted

Thanks. In my practice and experience there are still a number of lenders that will allow the retain and pay approach. If they insist on a reaff, however, then the debtor's options are more limited. My clients will often choose retain and pay knowing that it could backfire at any time. We discuss the risks and they make their choice.

Posted

There is the issue of can you keep your car and then there is the issue of should you keep your car. If you sign a reaffirmation, you are agreeing to pay for the car as if you hadn't filed bankruptcy & this can be a big risk if the car deteriorates in some way - and they often do.

It may be hard to believe, but once your bankruptcy ends, you will be approached by many lenders to purchase a vehicle. Some of these offers will be good, some will be poor.

It is your decision to make. Hope this perspective helps!

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