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Bankruptcy Law

I Have a Car Loan. Why Do I Have to Reaffirm it?

Bankruptcy Law We understand how you feel about your car.  It is one of your most important possessions.  Of course you want to keep it when you file a bankruptcy case.  Automobile finance companies are very interested in your bankruptcy case.  Most times, they want to repossess your car immediately. If you want to keep your car, you must reaffirm.  And you must do it right away.  

Statement of Intention:
When you file you have to state your attention as to whether you want to surrender your car, reaffirm the debt or redeem the vehicle.  Simply doing nothing, getting discharged and continuing to pay your car loan after your bankruptcy is not an option.  You must act on your statement of intention within 45 days.

The Reaffirmation Agreement:
When you sign a reaffirmation agreement, you are contracting to pay the car loan after bankruptcy just as you owed it before.  This debt will not be discharged and if this debt is not paid in the future, you are still liable for it.  If you do not keep up with your payments after reaffirmation, you risk losing your car and still being liable for the debt.  You attorney must attest to your ability to pay, so you must be able to afford the loan.  Your reaffirmation agreement must be signed before a discharge.  If it isn't signed, the lender can try to repossess your car.

The Reaffirmation Hearing:
If your attorney doesn't sign off on the reaffirmation agreement, you will be called to appear at this hearing.  The judge will ask you if you can afford to pay for the car and how you plan on paying for it.  If all is in order, you can reaffirm prior to your discharge.


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