I generally try to talk clients out of reaffirming a car loan in most cases but it is ultimately the clients choice. Reaffirmation is risky because if the car is destroyed in an accident or you lose your job you still have to keep up the payments, you just cannot walk away. There seldom is much of a positive benefit to reaffirming. If you keep up the payments most lenders will consider you in good standing. Most national lenders such as Chase Auto Finance do not require reaffirmation agreements.
The major exception is Ford Credit. They will fight tooth and nail and will actually repossess a car if not reaffirmed even if the payments are current. In Kansas they have won the battle about being able to repossess, but elsewhere it is usually still up for grabs. Most lenders will not repossess even if they state that it is their policy. If payments are current the lender is taking quite a risk by repossessing. There some credit unions who also take the same scortched earth approach that Ford Credit does, but even most credit unions will not repossess when push comes to shove.
Each situation is different and although most states have adopted the UCC the laws and court decisions differ, so it is best to make an informed decision with your bankruptcy attorney. Read more about the six options for cars in Chapter 7 keeping in mind that you should consult your local bankruptcy attorney. Enjoy your discharge and good luck!
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Tags: Car Loan, Loan
Posted July 16, 2011 by Imogen Lay under Credit Report