Reafirm?????

[Inky35]

What is the name of your state? Wa.

What are the benefits to reafirming? or are there any? I don't see any. The downside of it, that i see, is a posssible increase in interest rate and ,with my lawyer, an added fee to do these. Can the creditors make you reafirm? if they can't, why would anyone do it. CONFUSED Thank-you

P.S. We are planning to continue paying our house payment and our 2 car loans and a possible furniture loan that might have a "security interest" in it but I have not signed anything that says that. Now there contracts say those words in them but the ones we signed didn't! Thanx again

 

[Taffycat]

Hi,

I'm not an attorney. I'm just someone who filed CH 7 and waiting for our 341 creditor's meeting.

You questions just stirred a few questions of my own...

1) Are you saying that your attorney advised you that the interest rates could go up if you re-affirm?

2) Is there a fee to re-affirm?

Our attorney didn't mention this to us, but then again, he doesn't want to re-affirm anything. If this could happen, then I would want to be informed and prepared.

I am beginning to feel uncomfortable & think we should go ahead and re-affirm our mortgage & auto. But, I'm not sure I would want to if they could increase my int. rate.

I tried to phone in an auto payment on Friday. The info for automated pmt. no longer existed. I called Ford & they directed me to the "Ford Credit National Bankruptcy Service Center". They informed me that due to the bankruptcy, the only way I could make a pmt would be through mail-in to a new address. They also said they could no longer send out statements even after the bankruptcy discharge unless we do re-affirm. Otherwise, they would be breaking the law by "contacting" us.

I'm certain that we'll run into the same thing with our mortgage company.

I don't know how true it is, but I have read that if you don't re-affirm and get slightly behind on any future payments, that it is quicker / easier to repossess since there is no longer any agreement. (all payments become strictly voluntary).

So, this is one downside if you DON"T re-affirm. Like you, I need more information.

Did your attorney suggest how much they mighht increase the int. rate? And how much does it cost to re-affirm?

Taffycat

 

[Inky35]

I just talked to my lawyer and he said that we don't have to reafirm anything even if we continue to pay on our house and 2 cars, but I didn't know about the hassle with them after filing. But from what I have read on these forums is that YES they can raise your interest rate. I guess the hassle is better than the higher interest rate.

My attorney will charge me $90 to reaffirm any debt. This takes care of the extra paper work for him.

We just went out and bought 2 new vehicles (I need one to go back to work) and are going to vol. repo our previous one. The reason is because the van that we had had such a negative equity in it that we would have had to eat the cost on that if we bought after the bk discharge when we traded it in, and we got good interest rates because our credit is still good. But after finding out the hassle from you about making payments, we will have this problem with the 2 cars, and the mortgage.

Another question brought to mind now is if we need a deferment on any of these new cars, will we be able to???? we got 4 in the life of the contract with our van.

 

[bigun]

I think you are confusing some things. The holder of a secured debt {mortgage or auto loan} will simply foreclose or repo their proerty should you default. It doesn't matter if you reaffirm or not. Unsecured creditors have no such recourse. If you quit paying them or don't make minimum payments or are habitually late, then you will see your interest rates on those credit cards jump to default rates.

Secured creditors want you to reaffirm or, if you don't reaffirm at least keep paying. They are not going to discourage that by raising your interest rates.

Inky, you are really making a mistake. BK is about wiping out old debts and a second chance. You really jeopardize this chance by going out and buying new cars while your credit is still good. What did you accomplish? You're still upside down in the new cars. You're not even close to being discharged and you are wondering about how your creditors will react if you need to defer a payment. Instead of buying new cars, you needed to start figuring out how to live below your means . I hope I'm wrong but I really doubt this bk is going to be the 2nd chance you need.

 

[Inky35]

Thank-you Bigun for your concern. That is one thing that I like about this site, everyone seems to care about the others! )
We have thought this out alot and are sure we did the right thing. Our Van that we have is a 2000 and was bought for 30k 2 years ago, we got .09% financing on it, but today it is only worth 12k ( just because the value of it dropped drasticaly, it is in perfect cond. still). The 2 cars we bought are a 2002 small pickup (the very basic model) for my husband to go to work in and a 2 year old car for the family (and for me to go back to work when my youngest is old enough for me to leave her). These 2 vehicles are costing us the same in payments per month as the van that we will let go (vol. repo). The only reason I mentioned about the deferments you can get in an auto loan (which haven't hurt our credit at all, we just make an interest payment that month) is for emergency situations. We have had to use it once before, and until I go to work we will still be very close to our budget, not able to put money away for savings yet. Both Vehicles were looked up at a site that gives you the trade in value and resale value of your vehicles and be bought both for very close to these amounts. If we had waited to get 2 cars until our bk was discharged we would have gotten outragous interest rates, as it was we got great rates doing it now, plus the added bonus of being able to get out of the negative equity in our van. Before we bought these we consulted our lawyer. He thought it would be better to do it know also. We had never been lat with any of our debts until last month and that was only with one, but we were living off our ccs. We finally realized that we needed to do this bk. Our problem is with ccs, we would buy things that we didn't need to buy, because we didn't think it was our money we were spending. We are NOW on a strictly CASH budget I am happy to say! Thanx for everything!

 

[Taffycat]

Hi Inky,

One other piece of information in reference to reaffirming or not reaffirming:

After dealing with Ford over the phone, I called the paralegal at our attorney's office. She said that if you DON'T reaffirm, that your future payment history with your auto or mortgage company (good or bad) is NOT reported to the credit bureau.

She also confirmed what bigun informed us about the interest rate. As she put it, "The reaffirmation form will state the current rate that you already have, so why would it possibly change?"

I am not trying to sway you one way or the other, just passing along info. It seems that most attorneys (including mine) don't want to reaffirm anything. Possibly less paperwork for them AND / OR they are leaving us an "out" in case we decide to surrender the property at a later date and still be covered under bankruptcy.

In my case, my husband & I are leaning toward reaffirming the mortgage & auto simply to relieve some of the billing hassles AND have good credit reporting right away. In like turn, we are leaving our tractor as a "Retaining property and making regular payments." That way, if our construction business doesn't pick up for us, we can surrender it at a later date, but at least have the opportunity to try.

Taffycat

PS
I understand your fear of possibly needing to get an extension in the future. After having gone through the financial nightmare, it's difficult to put away the "what ifs." We have to think positive! We lived for months off of credit cards in our downward spiral. Now it's almost fun (??) to clip coupons! This "cash only" thing is not so bad, I've learned to respect & appreciate ordering a pizza! LOL Being self employed can be a little scary at times. Our monthly income is usually never the same although it all works out at the end of the year. Take care & best of luck!