QUESTION
Do I need to keep making my car payments before I make a decision to reaffirm or surrender it?
Asked on Nov 14th, 2016 on Bankruptcy - Nevada
More details to this question:
I have filed for chapter 7. The creditor I have my car loan with sent me a letter to reaffirm or I can choose not to reaffirm and I'll be allowed to keep the car as long as the payments are current. I have not decided whether I am going to reaffirm or not. Do I need to keep the payments current while I am deciding if I want to stop making the car payments until the reaffirmation deadline? Again, I have not decided whether or not I will reaffirm or not but I am leaning towards keep making the payment and not reaffirming because I had $4500 negative equity from my trade in so my payments are too high for this car. Can I make the payments for like 6 months without reaffirming then surrender the car to get a better deal?
3 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Many people in Chapter 7 choose not to reaffirm and continue making the payments. This is called "pay as you go", technically, it's not legal and the lender could repo the vehicle at any time but most lenders would rather have money than used cars. If you stop making payments, the lender will repo the vehicle ... after a couple months. This can be inconvenient, say if you're in Krogers and you come out with a cart full of goodies and your ride is gone. I advise you to empty the car, it's irksome to have your smart phone, baby, 2014 tax return, etc., taken with the car.
Answered on Dec 21st, 2016 at 5:16 AM
My experience is that most car lenders will not allow a reaffirmation to go forward if the ongoing payments are delinquent. I appreciate you want to have your cake and eat it too, but you are playing with fire and are likely to get burned.
Answered on Dec 20th, 2016 at 4:55 PM
Your choices are to keep paying or surrender the car.
Answered on Dec 20th, 2016 at 4:55 PM