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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2820
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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I am going through a do-it yourself bankruptcy and I wish to

Resolved Question:

I am going through a do-it yourself bankruptcy and I wish to keep my car, which is current in it's payments. My question is about the reaffirmation process. Should I reaffirm to keep the vehicle or are there other options? What if I don't reaffirm and just keep making paymentsm what are the legalities? Also the judge in my case seems to be very strict about reaffirming expenses.

Thank you.

Chris Catania
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
You have 3 options.
1. surrender the vehicle and wipe out the debt and go get something else.

2. Reaffirm the debt. The creditor will send you a reaffirmation so that you can keep the vehicle after the case. You need to remain current. You also need to show the judge that the reaffirmation is not an undue hardship on you. Basically, you need to show positive income in order to prove you can afford the car. So, if you have $25 left after you pay all of your monthly bills, and the car note, then the judge should allow it and sign off on it. You can also show the court any other income you have that may help, such as a family members contribution, etc.

3. Redemption. You can redeem the vehicle under sec. 722 of the code, whereby you buy the car for the fair market value, and discharge any overfinanced portion. This is done by motion in the case. There are companies that can fund the lump sum buyout for you, search google for 722 redemption and you'll see them.

The code does not allow ride-thru's any longer, at least officially. It would be up to the creditor if you are not approved for reaffirmation to decide if they will let you keep the car if you continue to make payments. There is no guarantee, and I've seen some take the cars, even if current! and even when they said they wouldn't. Some do let you, but it is totally at their discretion. Also, if you do this, you won't get 'credit' for timely payments on the credit report, since the debt would technically be discharged in the case.
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