Liens on personal loan or reaffirming?

[slliemab]

What is the name of your state? Michigan

Hello, I filed bankruptcy on March 19. My meeting of creditors is on April 19. One of my creditors was for a personal loan. They have a lien on my van and even though the van is worth only about $500 the loan is for over $8000. I have been paying $300 per month on that loan. I filed on my own with no lawyer and I said I'd like to reaffirm the loan because it's my only vehicle and I have 4 kids. I started getting all of these letters in the mail telling me not to reaffirm that I could likely get a loan on a newer model used van and my payment would be smaller than the payment I was making on the loan. I liked the idea (This van is always needing work and it costs me more than it's worth)and I really want to do something to help my credit so I called on it. They told me that they will likely be able to help me AFTER my meeting of creditors but not before. The guy told me that I don't have to pay on that loan while the bankruptcy is open but since he is no lawyer I wanted to ask about that. If I don't pay on the loan does that mean they can come take my van? I can't be left without a vehicle but I hate to pay on it if I could be using the money for other bills. Also, If I choose not to pay does that mean I cannot reaffirm if for some reason I cannot get a newer vehicle? The guy told me that they cannot take my van until the bankruptcy is discharged. Any advice for me? Do I continue to pay on the van or do I stop. Guess this is what I get for not hiring a lawyer. I just couldn't afford it.

 

[moburkes]

Dont' pay on that loan.

 

[Who's Liable?]

What is the name of your state? Michigan

Hello, I filed bankruptcy on March 19. My meeting of creditors is on April 19. One of my creditors was for a personal loan. They have a lien on my van and even though the van is worth only about $500 the loan is for over $8000. I have been paying $300 per month on that loan. I filed on my own with no lawyer and I said I'd like to reaffirm the loan because it's my only vehicle and I have 4 kids. I started getting all of these letters in the mail telling me not to reaffirm that I could likely get a loan on a newer model used van and my payment would be smaller than the payment I was making on the loan. I liked the idea (This van is always needing work and it costs me more than it's worth)and I really want to do something to help my credit so I called on it. They told me that they will likely be able to help me AFTER my meeting of creditors but not before. The guy told me that I don't have to pay on that loan while the bankruptcy is open but since he is no lawyer I wanted to ask about that. If I don't pay on the loan does that mean they can come take my van?/QUOTE]
The person or company that has a lien on your vehicle CANNOT repossess teh vehicle while you are in the BK process. They cannot even contact you to remind you to make a payment. Reaffirming the loan is a personal decision, but if I were to look at it, I would say do NOT reaffirm it. If you are already having problems with the van, let it go. You will be at a higher interset rate for any new vehicle you get, but that's part of the game.

I can't be left without a vehicle but I hate to pay on it if I could be using the money for other bills. Also, If I choose not to pay does that mean I cannot reaffirm if for some reason I cannot get a newer vehicle?/QUOTE]
The reaffirmation needs to be done BEFORE your meeting of the creditors.

The guy told me that they cannot take my van until the bankruptcy is discharged. Any advice for me? Do I continue to pay on the van or do I stop. Guess this is what I get for not hiring a lawyer. I just couldn't afford it.

Since the van has a lein on it, you may not be able to just hand over the van as a trade in. I would wait for some more responses...

 

[moburkes]

The van is worth $500. Let them take it after the stay has been lifted (which they probably don't know how to do) or after the BK has been discharged. OP can attempt a loan later (after saving his $300/month) with www.roadloans.com or Ford Motor Credit.

 

[slliemab]

I was not thinking I'd trade it in. I am assuming that they'll take it after the bankruptcy is discharged.

I forgot to mention the guy that I talked to (Who happened to be from Ford Motor Credit) told me that my credit report shows the loan as unsecured. Why is it showing up as unsecured if I have a lien on the van?

 

[Gregeney]

First, make SURE they have a valid lien on the van. I'm not sure about MI but here liens are printed on the title. If the title you have is older than the loan, check with the state transportation dept. to make sure. If the lien is valid, the credit report is simply wrong.

It makes absolutely no sense to pay $8000 for a $500 van. They can't get it from you until the Stay is lifted. They might make a motion for relief from the Stay or just wait until your discharge, but wait and let them repo it. Drive the van until then and save for a downpayment on another vehicle. Be careful of the interest rate on any new loan.

 

[slliemab]

OK this may be a dumb question but when do they lift the stay? Is it before or after the discharge?

 

[Betty]

The automatic stay lasts until the bk is discharged, a dismissal occurs or a motion for relief is granted. Secured creditors may try to get a stay lifted if you cannot make payments.

 

[slliemab]

Another question..

When I filed I said I'd reaffirm because I didn't want to lose my only vehicle but now I am rethinking that.

When do they talk about the reaffirmation agreement? Who brings it up? I was told that since it's just reaffirming the loan and the van isn't worth nearly what I owe the judge might not approve the reaffirmation anyway. Will this be mentioned at the meeting of creditors on April 19?

 

[bigun]

For a reaffirmation to be valid, it must be signed and properly filed. Since you're pro se, the code requires a judge to formally counsl you on the ramifications of a reaffirmation.
Were I you, I;d telll the trustee you've changed your mind about reaffirming {assuming you've not signed anything} and follow that up with a letter to both the trustee and the judge requesting they cancel the reaffirmation hearing.

 

[Gregeney]

Usually, creditor would mail you the reaff for you to fill out and send back to them. They might or might not show up at the 341 meeting. Even if you had already signed the reaff and it was filed, you have a certain amount of time to rescind it. In order for the Judge to say anything about it, the reaff would have to be signed and filed. At that point, a Hearing would be scheduled for approval. And yes, it is very possible for the Judge to disallow it anyway. It is hardly in your best interest and would inhibit the fresh start that bankruptcy should give you.