One of the more interesting questions arising from filing bankruptcy deals with reaffirming property you want to keep from either being repossessed or foreclosed. But what happens when a creditor allows you to keep property when an affirmation agreement has not been signed and you then go into default? Can a creditor report a repossession of a non reaffirmed property after a bankruptcy discharge?
This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “My husband and I filed (bankruptcy) and were discharged in 11/10. We were able to include our pontoon boat in the BK, however, were able to keep it as long as we made the payments. We have decided that we no longer need the boat and now have not paid anything on it for 2 months. The bank called me at work yesterday. If we let the boat go back, will they be able to report a repossession on our credit? It already states included in bankruptcy.”
Despite filing bankruptcy to have a debt discharged, a reaffirmation agreement is an agreement made between the debtor and creditor to allow the debtor to reaffirm his or her debt and keep the asset as long as the payments are up to date and current. In return, the debtor promises the creditor in writing that the reaffirmed asset will not be discharged in the bankruptcy. These agreements are approved by the bankruptcy court, and the lawyer for the debtor has to sign off on the agreement stating the debtor was counseled on the legal pros and cons of making such a decision.
From the description in the bankruptcy discussion, the pontoon boat seems to have been discharged in the bankruptcy and not reaffirmed. It seems the lender for the pontoon boat voluntarily allowed the debtor to keep the boat as long as the couple was making payments on it.
The lender has every right to legally repossess the boat when it goes into default if the boat has a lien attached, but once a debt has been discharged from bankruptcy, the lender no longer has a legal right to use collection tactics to collect the legally forgiven debt. That also means the lender cannot legally report the default to the credit agencies.
Likewise, just because you legally do not have to pay your debts does not mean you cannot pay them if you want to. You can enter into a verbal agreement to continue to pay the loan, and if the lender allows you to keep the asset while paying, that is between you and the creditor. In this particular case, it is not likely the lender will report the repossession to the credit agencies.
From this personal bankruptcy story you should be able to see how complicated bankruptcy laws can be. If you are considering filing bankruptcy, you might want to consult with a bankruptcy lawyer to help you with the complexities of bankruptcy law.
Contact us here today at www.betterbankruptcy.com , and we will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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