How do I keep my car if I was dischargd from a chapter 7 bankruptcy? 11 Answers as of February 01, 2012

You need to see a lawyer to straighten it out. From the sounds of it you filed this case on your own. That is the problem with doing it yourself. It looks deceptively easy, but there are some required steps that can easily be missed.

You never filed a reaffirmation agreement and so the loan is gone with the discharge. The lender could allow you to sign a new loan basically reaffirming the debt. But without the agreement in place, you shouldn't be making payments as you aren't making progress towards paying for the car. Oh, and yeah, you screwed up your buddy's credit.

You need to check the docket in your case and see if a reaffirmation agreement was in fact filed. If no reaffirmation agreement was filed and your case has been discharged, then the creditor can repossess the vehicle. If this is the situation you are in, you may be better off surrendering the vehicle back to the lender. As to the payments, as long as the lender did not send you bills and demand payments, they probably do not have a problem with the 362 stay or the discharge order. Quite frankly, these are all issues that your attorney should have handled in your case. He or she should have made sure that a reaffirmation agreement was filed prior to the discharge of your case and if the lender did not wish to enter into a reaffirmation agreement, your attorney should have explained this to you so that you did not continue to make payments for a vehicle you could not keep.

You can keep making payments and keep the car. You do not have to sign a reaffirmation agreement.

You have to have signed the reaffirmation agreement, if not, they can come and take your car at any time. If you did (which sounds like the case since they have let you keep the car) file a dispute with the credit report company, they will contact your lender and that should fix it. The person you co-signed for should also do the same if it is showing up on his credit report that he discharged the loan you so-signed on, assuming that he has been making the payments.

When you filed bankruptcy, it looks like you stated your intent was to reaffirm the debt owed on your car. Generally, what happens next is that creditor on the vehicle will send you a reaffirmation agreement to complete and return to them. It looks like either the creditor dropped the ball, or you failed to complete the paperwork and send it back to them. Once the creditor receives your reaffirmation agreement they will file it with the court and set a hearing date, if you did not have an attorney represent you in completing the agreement. You would then need to appear at the reaffirmation hearing and tell the judge whether this agreement is in your best interest. You mentioned there is a co-signor on this debt. If the co-signor did not file bankruptcy, they are still legally liable for that debt as their legal obligation has not been discharged. You need to continue making the payments on the car if you intend to keep it. Since you've already obtained your discharge, a reaffirmation agreement is likely a moot point and a non-issue. You need to work this out directly with the lender.

You cannot re-open a Chapter 7 case for the sole purpose of reaffirming the Debt. This is because the debt is discharged if not reaffirmed before the issuance of the discharge order. Based upon your fact statement, you are in what is commonly known as a "retain and pay" situation. The lender's lien , or "security interest," in said vehicle was not affected by the bankruptcy discharge. The lender can accept and apply your payments to the loan under the security agreement, and they will have to release their lien on the title once you pay the car off. If you should decide to stop making payments, the lender can enforce its security interest in the car by repossessing it, and then selling it at auction. Your Bankruptcy Discharge would protect you against any claim by the lender for a deficiency balance after the sale of the car. Your credit report would not reflect either your making the payments OR your default on the loan. It is in essence a "zombie" debt. Problems in this area usually arise where the debtor comes out of the bankruptcy with a large balance "owed" on the vehicle (the balance isn't personally owed if not reaffirmed in the bankruptcy, but the secured interest of the lender is so large that it may outlast the life of the car)... the vehicle could break down and then the Debtor, having not reaffirmed the Debt, is in a position where further payments are futile. The lenders sometimes refuse to release the title to the borrower, thereby making disposal of the vehicle very difficult. The car is legally in "limbo." Neither the Debtor or the Lender wants the car since it is at that point just a liability. The Debtor will have to be creative in disposing of the vehicle, in a manner that should be discussed with a bankruptcy attorney in person and in private. (confidentially).

You probably included in your paperwork a Statement Of Intention that you wanted to reaffirm the car. You needed to go one more step after filing and execute a reaffirmation agreement. If you do not, the creditor has the right to repossess the vehicle after the case is closed. Any other party to the loan is still legally responsible for the debt. However, the creditor cannot report to the credit bureau that a vehicle is discharged in bankruptcy if a co-borrower in fact did not file as that is inaccurate information. They can dispute the information with the credit bureau. I am troubled by them continuing to take payments and also that there is a non-filing borrower on the loan as well. If the loan is current, then these facts would make it difficult under state law to justify a repossession just because you did not file a reaffirmation - something an attorney would have been aware of and taken care of for you. Your alternative is to reopen the case to have the reaffirmation signed and filed, provided you do not have a negative number on line 20c of your Schedule J or if someone else is making the entire car payment.

In the bankruptcy you had the option to reaffirm, surrender or return the vehicle. You comments indicate that you signed a statement of intent stating that you intended to reaffirm the debt. Signing this form does not reaffirm the debt. As you were told, to reaffirm the debt a reaffirmation agreement that is about 14 pages long needs to be completed, signed by the creditor and you and then filed with the court. It is my practice to request these forms from the creditor because I usually do not have the specifics of the loan such as interest rate. In Wisconsin however, the Consumer Protection Act provides some protection to debtors who have a car loan but do not sign a reaffirmation agreement. Depending on the value of the vehicle, the creditor would need to repossess the vehicle in state court. To do this you have to have missed payments. In some other states creditors have repossessed the vehicle for failure to file a reaffirmation agreement but I have not heard of a creditor succeeding in WI for this reason alone. The creditors punish you for not filing the reaffirmation agreement by not reporting the account as current even though you are making payments and sometimes not sending a bill. I leave it to my clients as to whether or not the costs out weigh the benefits in filing a reaffirmation agreement. Without a reaffirmation agreement on file, the creditor can only take the vehicle if you stop making payments but cannot obtain a deficiency judgment. If there is a reaffirmation agreement is filed and you get your car repossessed then they can take the care and get a deficiency judgment (difference between what you owe and what they sell it for). Everything is fact specific but I hope you can apply this to your situation.

You did screw up. To keep the car you needed to sign a reaffirmation while the case was open. In not using a lawyer, you probably cost yourself a car. See a lawyer now to see if he can work out anything, such as reopening the case to reaffirm.