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A.J.
A.J., Attorney
Category: Bankruptcy Law
Satisfied Customers: 4300
Experience:  Experienced consumer bankruptcy attorney.
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I bought a car in August 2009. In November 2009, I filed chapter

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I bought a car in August 2009. In November 2009, I filed chapter 7. I filed a reaffirmation to keep my car. In april 2010, my debts were discharged. Shortly thereafter I found out from the bank which holds the loan to my car, that my reaffirmation never got filed according to them. When I asked them what this meant, they said they would allow me to keep the car as long as I continue making payments, however if at any time I did not want to keep the car, they would take it back. Recently (about 9 months ago), the car was in an accident and is now not drivable. Since my girlfriend was driving the car, and she didn't have insurance, my insurance will not cover the cost of repairs. The accident wasn't her fault, however the driver which hit the car her insurance company will also not pay because they do not believe it's their drivers fault. The police report is vague, I don't have time and money to get a lawyer to fight this case to get the car fixed, and the cars value is probably not worth the repairs. Since I've kept the car and made payments till now, will that change the terms of the bankruptcy. Can I just call the bank and tell them to pick up the car, and be done with all this, without any repercussions. NOTE: the finance company is GM Financial and their website still states it's is aware of my bankruptcy and is not trying to collect a debt.

SavyLawyer :

Hello, and thank you for contacting Just Answer. My name isXXXXX am a bankruptcy law professional, and I look forward to answering your question this morning.

SavyLawyer :

So that I understand your question a little bit better, I need a little bit more information. Was the debt for the vehicle listed in the bankruptcy schedules? In the petition, did you state that you were reaffirming the debt?

Customer:

Yes, the debt was listed in the bankruptcy. I was told by my attorney I would need to fill out a reaffirmation agreement. So I did, and sent it in after I sent my completed paperwork to be filled for chapter 7. It wasn't until after everything was discharged that I found out the reaffirmation wasn't filed.

SavyLawyer :

Thank you for the extra information. While it is true that in order to make sure that a creditor does not repossess a vehicle that they have a secured interest in is to reaffirm the debt, often creditors will allow you to keep the asset so long as payments are made on time. However, if a reaffirmation agreement was not filed within 60 days of the section 341 meeting of creditors (where the debtor goes in and the trustee asks them questions), and the debts are discharged, then generally the debt no longer exists and the debtor is not liable for it. Only a reaffirmation agreement signed by both parties and filed with/approved by the bankruptcy court binds the debtor to future payments after the bankruptcy. If no reaffirmation agreement was filed, generally this means that the debt was discharged along with all of the other debts, and nothing further is owed on the debt. So, at least in terms of the underlying debt for a vehicle that was not reaffirmed, it would no longer be owed to the creditor, they cannot try to collect further on that debt.

SavyLawyer :

So, no, at least in terms of the debt for purchase of the car, once the bankruptcy debts are discharged, and no reaffirmation agreement has been filed, the underlying debt is gone, the creditor cannot seek to collect it.

SavyLawyer :

I hope this answers your question, but let me know if you require any additional information or need clarification. Otherwise, please remember to RATE my answer positively so that I can receive credit for my work.

Customer:

Could there be any other repercussions beyond the debt, such as the car being damaged and not drivable, or does the bankruptcy absolve me from any other possible liabilities. In other words, the bank just has to suck it up and deal with the reality.

SavyLawyer :

That is a good question, and I am not finding any great caselaw just on a quick search that deals with the issue of other liability. I could certainly see an argument to be made against you for negligence, but the counter-argument is that they allowed you to keep the car and keep paying despite the fact that you no longer really owed the underlying debt. That was a risk the bank took, and so the argument would be they would, as you said, have to "suck it up" and deal with the situation as it presents itself. They could certainly also pursue the driver of the other vehicle for damages, if they were ultimately responsible for the damages. So, based on the information provided, while I could see an argument to be made on their part that you are liable to them for the damages, I think it would be a weak case, given that they allowed you to keep the vehicle despite knowing that the underlying debt had been discharged, and that damage to the vehicle is an inherent risk in it being driven by someone who no longer owes a debt.

Customer:

Perfect. Thank you!

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