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Not reaffirmed loan - Affect credit?


NINIBIRD
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I have an auto loan that I did not reaffirm through my bankruptcy.  I was making monthly payments but fell on hard times again and missed a couple payments.  I am being told that I cannot pay my back payments now...I have to pay the balance of my loan or they will repossess the car.  Is this going to affect my credit again?  Or since I didn't reaffirm, does it not make a different at this point?  I'm thinking it would be best to just let them take the car and get a different one.  Am I in the right mindset? 

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I have an auto loan that I did not reaffirm through my bankruptcy.  I was making monthly payments but fell on hard times again and missed a couple payments.  I am being told that I cannot pay my back payments now...I have to pay the balance of my loan or they will repossess the car. 

 

Every loan has what is known as an acceleration clause.  That means if you default then they can immediately call the entire balance due in order to redeem the collateral.  That is exactly what you loan company is telling you.

 

Is this going to affect my credit again?  Or since I didn't reaffirm, does it not make a different at this point? 

 

Yes.  A repossession always affects your credit.  It will make a difference and if your state is a recourse state they can come after you for the deficiency balance between what the car sells for at auction and what you owe.

 

I'm thinking it would be best to just let them take the car and get a different one.  Am I in the right mindset? 

 

That is assuming you can get anyone to finance you with BK within the past year and a recent repo.  

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I'm going to disagree here.  ALL debts are discharged in BK, whether you list them or not.  Unless you specifically signed the proper papers and the trustee agree, the loan was discharged.  Because you kept making payments, the creditor let you keep the car. 

 

They can repo it, but on your reports it will say IIB.  No further damage.  You can probably get another car within 6 months...assuming you've got a job.

 

(All this happened to me about 8 yrs ago).

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I have to disagree with you here Clydesmom on the deficiency.

 

The auto loan was not reaffirmed. The car technically should have been repo'd at the time of the BK. The bank did not do so however because it was getting the money. Not that it is not getting its money, the want to do the repo. However, the loan balance is still considered discharged. Hence, even if the OP ran the car up a pole, There is no balance due and no deficiency. The only recourse the bank has is to take the car.

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I'm going to disagree here.  ALL debts are discharged in BK, whether you list them or not.  Unless you specifically signed the proper papers and the trustee agree, the loan was discharged.  Because you kept making payments, the creditor let you keep the car. 

 

They can repo it, but on your reports it will say IIB.  No further damage.  You can probably get another car within 6 months...assuming you've got a job.

 

(All this happened to me about 8 yrs ago).

 

I have to disagree with you here Clydesmom on the deficiency.

 

The auto loan was not reaffirmed. The car technically should have been repo'd at the time of the BK. The bank did not do so however because it was getting the money. Not that it is not getting its money, the want to do the repo. However, the loan balance is still considered discharged. Hence, even if the OP ran the car up a pole, There is no balance due and no deficiency. The only recourse the bank has is to take the car.

 

I did get that wrong but the repo date will be listed as when they pick it up which is after the BK.  A new lender within a year of BK and seeing the car taken back after the discharge is going to be reluctant to do a new loan no matter what.  

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Well, could have been my lender, but their trade line said IIB from discharge and didn't change.  Could be because once they were IIB, they no longer had permissible purpose.

 

Anyway, in general, most lenders will finance within 6 months of BK.  They know you can't do it again for years, and they'll just jack up the interest rate.

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