Bankrupsy-auto reaffermation-to pay or not to pay

What is the name of your state? Minnesota. I filed chap.7 I have a car according to KBB is $2000 (trade in value) I owe $6000. I said I'd keep paying on it but I did not sign a reaffermation on it. My question is because of the value, do I have to keep paying for it? Am I protected under the bankrupsy if I don't? Can and/or will they reposses? If I am covered do they have to releas the lein on the car?

[VR_Hunter]

Originally posted by Sharon14
What is the name of your state? Minnesota. I filed chap.7 I have a car according to KBB is $2000 (trade in value) I owe $6000. I said I'd keep paying on it but I did not sign a reaffermation on it. My question is because of the value, do I have to keep paying for it? Am I protected under the bankrupsy if I don't? Can and/or will they reposses? If I am covered do they have to releas the lein on the car?

Keeping it simple.
If you don't pay on the car, then they can take it back. They can not sue you or call it a repo (even though a repo is what it is). It is still on the CH7 bankruptcy, you just decided to keep on paying, so they let you keep it.

On another note:
Why would you ask to keep a vehicle and then not pay? Find something better you can buy now? Sounds fishy.

[AttorneyOney]

Your bankruptcy discharge will eliminate your personal liability on the $6000 balance. The lender's lien on the car will remain, however, which would allow the lender to repo the car after obtaining relief from the automatic stay. The lender is what they call an "undersecured" creditor. They are secured to the extent of the value of the collateral and unsecured as to the deficiency.

HOWEVER, if you have the cash, you can "redeem" the car under Code section 722 by paying the lender the actual value of the car. The way this works is this: on your Schedule C claim a nominal exemption for the car. List the lender on Schedule D as a secured creditor, and specify a market value for the car. File a statement of intention that indicates your intention to redeem the car.

The valuation of the car for redemption purposes is less than than the KBB value because the creditor would incur expenses in repossessing and selling it, and because the creditor would realize less than that value in a forced sale. You or your attorney can negotiate the redemption price and can fall back on the court if you're unable to agree on a reasonable valuation.

Thank you for your advice! Much appreciated.