What Happens If I Didn’t Reaffirm My Car Loan In Bankruptcy And I Fall Behind?

by Susanne Robicsek, North Carolina Bankruptcy Attorney

June 10, 2008

When you file bankruptcy, you list all your debts, even if you owe money for something that you want to keep like a house or car.

Someone asked Georgia attorney Jonathan Ginsberg what to do with a debt that hadn’t been reaffirmed in his Chapter 7 case, which had been handled by another lawyer.

The caller appeared to be upset to learn that his attorney didn’t file a reaffirmation on his car loan. If the reaffirmation isn’t filed, the car might be picked up even if the debt isn’t in default but in this case the car lender didn’t do this. The lender allowed the borrower to continue paying.

The message appeared to be from someone who had fallen behind on his car payments 2 years after filing for bankruptcy. This particular person may have ¬†been helped by the fact that the debt wasn’t reaffirmed since reaffirmed or not, a car can be repossessed if the loan payments fall behind.

  • However if the debt wasn’t reaffirmed, then all the creditor can do is pick up the car and sell it and this debtor could not be sued for any balance owed.

Had the debt been reaffirmed, the debtor might have been calling asking if a creditor had the right to charge for return of his vehicle or worse yet, sue for a deficiency on a car that had been sold after default.

Many courts have ruled that if a car hasn’t been reaffirmed, then the creditor has the right to repossess and sell the car, but if a lender allows a debtor to keep and pay for the car, then the debtor is able to have their car without the risk if something happens down the road, pun intended.

Read: Can A Vehicle Lender Repossess My Vehicle If I Do Not Reaffirm the Loan in Bankruptcy? By Jonathan Ginsberg, Atlanta Bankruptcy Attorney on Jun 2, 2008

by Susanne Robicsek, Charlotte NC Bankruptcy Attorney

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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Last modified: March 6, 2012