Bankruptcy, Car Loans, And Reaffirmation Agreements | What You Need To Know | Summary and Q&A

4.3K views
August 17, 2022
by
Consumer Warrior
YouTube video player
Bankruptcy, Car Loans, And Reaffirmation Agreements | What You Need To Know

TL;DR

When filing for bankruptcy, car loans are treated differently than unsecured debts. You can choose to keep making payments on the loan to keep the vehicle, or surrender it through bankruptcy to eliminate the debt. Reaffirmation agreements may be required for keeping the car, but they are not often approved by bankruptcy courts.

Install to Summarize YouTube Videos and Get Transcripts

Key Insights

  • 😨 Secured debts, such as car loans, are treated differently from unsecured debts in bankruptcy.
  • 😨 Reaffirmation agreements may be required to keep a car, but they are often not approved by bankruptcy courts.
  • 🎴 Surrendering a car through bankruptcy eliminates the debt, but you won't owe anything on the loan going forward.
  • 👻 Approved reaffirmation agreements allow for on-time payment reporting to credit bureaus, but they also expose you to potential lawsuits for the unpaid balance.
  • 😨 Bankruptcy judges in Arizona often discourage or disapprove reaffirmation agreements on car loans due to concerns over potential future lawsuits.
  • 💳 Not having an approved reaffirmation agreement means your on-time car loan payments will not be reported to credit bureaus.
  • 💳 The impact on credit scores from having reaffirmed car loan payments reported post-bankruptcy is not significant.

Transcript

hey everybody john skiba here from the consumer warrior youtube channel and in today's video i'm going to talk about car loans in bankruptcy there's a lot of misunderstanding about as far as how you keep your car what a reaffirmation agreement is and whether you should enter into one or not and how that whole process works if this is your first tim... Read More

Questions & Answers

Q: What happens to my car loan if I file for bankruptcy?

In a Chapter 7 bankruptcy, you can choose to keep your car by continuing to make monthly payments or surrender it to eliminate the debt.

Q: What is a reaffirmation agreement?

A reaffirmation agreement is a new contract between you and the lender, where you reaffirm the terms of your original car loan agreement.

Q: Are reaffirmation agreements always approved by the court?

No, reaffirmation agreements are not often approved by bankruptcy courts, as they are considered risky for debtors.

Q: Can the lender pursue me for the balance if I have an approved reaffirmation agreement?

Yes, if you have an approved reaffirmation agreement and later are unable to keep the car, the lender can still sue you for the balance.

Q: Will my on-time payments be reported to credit bureaus with a reaffirmation agreement?

Yes, with an approved reaffirmation agreement, your on-time payments will be reported to credit reporting agencies, positively impacting your credit.

Q: Why do bankruptcy judges in Arizona often not approve reaffirmation agreements?

Bankruptcy judges in Arizona view reaffirmation agreements as risky and may enter an order for debtors to continue making payments without the need for a reaffirmation agreement.

Q: Will not having a reaffirmation agreement affect my credit score?

Without a reaffirmation agreement, your on-time car loan payments will not be reported to credit bureaus, so it won't have a significant impact on your credit score.

Q: Should I submit a reaffirmation agreement for my car loan during bankruptcy?

While it's recommended to submit reaffirmation agreements, they are rarely approved by courts, so consult with your bankruptcy attorney for guidance.

Summary & Key Takeaways

  • In a Chapter 7 bankruptcy, secured debts like car loans are treated differently from unsecured debts.

  • To keep your car, you need to continue making monthly payments on the loan or surrender it through bankruptcy.

  • Reaffirmation agreements, which are new contracts between you and the lender, may be required to keep the car, but they are not often approved by bankruptcy courts.

Share This Summary 📚

Summarize YouTube Videos and Get Video Transcripts with 1-Click

Download browser extensions on:

Explore More Summaries from Consumer Warrior 📚

Summarize YouTube Videos and Get Video Transcripts with 1-Click

Download browser extensions on: