There are times when a client calls up after their Chapter 7 bankruptcy was successfully discharged. Most frequently, the client’s financial circumstances altered in a way that may have an impact on the bankruptcy order.
Recently, I received a call from a customer whose wife had just lost her job. They were unable to comply with the bankruptcy order’s requirements as a result of losing their employment. At first, they intended to keep their automobile and finish paying it off. However, it became too challenging to make payments once the wife lost her work. They made the decision to return it to the bank instead. If it need extensive repairs, can I still sell it? But what they were actually requesting was:
After declaring bankruptcy, am I able to keep my car?
The response is a resounding and unmistakable YES! You might transfer ownership to the bank. You’ll want to know whether this will settle your debt without the bank suing you, though. Once more, everything hinges on whether you consented to a bankruptcy deal that included a reaffirmation order after discharge.
What about a contract that is renewed?
You may argue that by signing a reaffirmation agreement, you haven’t actually been dismissed. Reaffirmation gives the bank the power to bring legal action against you. If the profits from the sale in execution fall short of covering your debt, you can take this action. You give up the right to an order protecting you from a bankruptcy discharge by signing this reaffirmation agreement. In the event of a later failure on the vehicle loan, the discharge order shields you from being sued for it.
Despite being unsettling and cloaked in mythology, bankruptcy is a wonderful thing. It’s interesting how the law steps in to help those who are actually in debt. Discharge gives bankruptcy clients the chance to reorganise their finances without the ongoing prospect of legal action. Therefore, any failure on your side to fulfil payment commitments shouldn’t result in a lawsuit if a reaffirmation agreement wasn’t ever signed. Even if it is to their advantage, creditors are not permitted to pursue collection efforts against defaulting debtors who have received a bankruptcy discharge.
Reaffirmation agreements are unjust and go against society’s legal precepts even though they are only based on contract and are holy. It is illogical to anticipate that a distressed debtor will give up assets right away once a discharge has been granted. In addition to defeating the entire point of declaring voluntary bankruptcy, it also renders the entire bankruptcy procedure pointless. But the unfortunate truth is that the lender is in control here. The BAPCPA was amended in 2005, and key choices that affected the bankruptcy legislation were also made at same time.
Ford Motors repossessed the vehicle in the Antoinette Dumont v. Ford Motors case, despite the fact that Antoinette was not a party to a reaffirmation agreement. The judge ruled in Ford Motors’ favour. So, incidents of this kind are not unusual. On the other hand, there are occasionally auto lenders that are accommodating and let you retain your automobile as long as you adhere to the repayment plan as instructed after being granted relief.
Of course, reexamining the reaffirmation agreement is a preferable method to address repossession. If the automobile is nearly paid off and has a significant amount of equity, signing one may be advantageous. Say the vehicle loan has a year left to go. You also have a vehicle with around $11,000 in equity. Because of that, a creditor will view you as risk-free in terms of default. Therefore, even if he does attempt to pursue contractual reaffirmation, he will still be able to recover all of his money following a sale in execution. However, you should proceed cautiously as there are certain lenders who, upon learning that the automobile has significant equity, may push for its repossession in order to benefit themselves. So, despite the risks, we frequently tell our customers to choose the reaffirmation path because it’s usually secure.
There will be consequences for how you handle a bankruptcy reaffirmation agreement today. This is why you must file for bankruptcy with the assistance of a bankruptcy lawyer.
If you need legal assistance or guidance before filing for bankruptcy, get in touch with the renowned Recovery Law Group. Visit https://recoverylawgroup.com/bankruptcy/ to set up a consultation.